GrowthTurtle
Data Science PhD & IEEE Fellow, Ex-Two Sigma
Western Digital looks cheap against its earnings. It trades at 14x next year's estimated $31.75 a share, below the industry's usual 18x, which implies fair value of about $503-640, so it sits 11% below where fair value starts. It would only look expensive above $793.74. This is a levels-only read, not fundamental work. x.comÂ
Western Digital's margins are riding price increases that management sees lasting three to four more quarters. Price per terabyte rose 28% year on year while cost per terabyte falls less than 10%; December gross margin is guided to 60-61%. At about 10x fiscal 2028 consensus earnings, the stock prices in an early end to hikes despite scarce heads and media that WD mostly makes itself. Buy, $406. Long-term contracts cover less volume further out, leaving spot sales exposed if pricing turns. x.com … Show more
Western Digital's hard drives capture AI-generated data, supporting stronger margins and guidance. Most data from models, agents and robots ends up on hard drives. Revenue rose 55% to $4.38B, gross margin hit 58.1%, and next-quarter revenue guidance rose to $5.0-5.2B versus $4.57B expected; EPS guidance midpoint is 21% above consensus. Before earnings, at ~15x earnings it looked priced as a cyclical, not an AI winner. Overweight, $613 target and 62% indicated upside in the pre-earnings report. … Show more
AI data and content creation could lift Seagate's and Western Digital's cross-cycle earnings even if supply catches up and pressures prices and margins. Western Digital reported hyperscaler demand signals through 2030/31, making 2013-2024 normalized earnings a poor baseline. Still not a huge fan of their stocks given their large premium to memory makers and Toshiba's production ramp. x.com x.comÂ
Western Digital benefits from HDDs' low storage cost and growing cloud demand, with higher NAND prices adding pricing power. Nearline bit demand normally grows 20-25% with some deflation, while AI data growth now exceeds 30%; HDD costs ~$0.02-$0.03/GB versus ~$0.25 for NAND. Before AI, the consolidated, ~95% cloud-exposed market looked worth a low-to-mid-teens multiple of normalized EPS. Entry barriers are extremely high, but irrational competition among the three players is a risk. x.com x.com … Show more
Low forward earnings multiples across eleven stocks cannot persist indefinitely. Nvidia trades near 17.5x, its lowest in over a decade; Oracle near 15x, its lowest in six years. Uber is at 17x, Broadcom 19x, Vistra 15x, AppLovin 14.5x, TSMC 19x, Forgent Power Solutions 18x, Nokia 19.5x, American Express 17x and Western Digital 14x. x.com x.com x.com x.com x.com x.com x.com x.com x.com x.com x.comÂ
The valuation gap favors SK hynix and Samsung over Corning, Seagate and Western Digital. Companies trading at 20x are still called cheap while the memory makers trade at 2x; Corning is not cheap on a $4 run rate even with growth, and neither are Seagate or Western Digital. The gap should narrow as memory rises while HDD stalls. x.com x.comÂ
Among the top 60 developed-market tech stocks, Micron, Kioxia, Western Digital, Oracle and AMD screen as the most undervalued on forward P/E relative to FY26-28 earnings growth. Cloudflare, Tesla, CrowdStrike, Snowflake and Arm screen as the most overvalued on the same measure. x.comÂ
Semiconductor and memory stocks still look cheap despite the panic on forward earnings and growth-adjusted valuations. SK hynix trades at 4.4x forward earnings with a 0.04 PEG, Micron at 4.6x and 0.11, Sandisk at 5.5x and 0.10, and Nvidia at 14.2x and 0.22; the table extends across chipmakers and suppliers. Some of these figures may reflect peak earnings. x.com x.comÂ
A supply response could compress Western Digital's pricing and margins, eroding its apparent cheapness. Its 2013-24 normalized earnings merit a look: even huge demand growth in other industries eventually drew supply and mediocre returns. A digestion/reset would hurt buy-and-hold investors, though the outcome is uncertain. Pre-AI economics were mediocre and unlikely to become amazing post-AI; TSMC's stronger pre-AI economics make its post-AI case better. x.com x.com x.comÂ
Western Digital may be the best of breed in memory and storage because its return to solid trailing operating and free cash flow funds capex and debt reduction without relying on outside financing. Micron is the beast of the group and SanDisk the petulant child, but Western Digital's self-funding sets it apart. x.comÂ
