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Western Digital Corp. (NASDAQ:WDC) stock has doubled in 2026 as booming AI storage demand fuels growth, with CEO Irving Tan forecasting sustained expansion despite mounting concerns over data center spending and rising investment costs.

Tan told CNBC last Friday that AI-related storage demand remains strong and continues to expand, while the company’s latest quarter showed better-than-expected results and a stronger outlook despite rising investment requirements.

Western Digital reported fiscal first-quarter 2027 results that beat expectations and guided fiscal second-quarter adjusted EPS to as much as $6, well above the $4.80 analyst consensus.

The company also raised its quarterly dividend by 17%, although higher capital spending and input costs remain key investor concerns.

CEO Sees AI Storage Demand Staying Strong

Tan said Western Digital expects AI-related storage demand to grow at about a 25% compound annual rate over the next five years.

Tan acknowledged that AI infrastructure stocks have faced pressure amid questions about the returns on massive investments in artificial intelligence, particularly among newer cloud computing providers known as neoclouds.

He said uncertainty surrounding those companies’ business models, along with concerns about interest rates, has contributed to broader market volatility.

However, Tan emphasized that Western Digital’s business is largely supported by major hyperscale cloud providers with established operations, strong balance sheets and significant cash generation.

Tan also said Western Digital is working with frontier AI labs to understand how hard drives can support next-generation data-center architectures.

Management expects gross margin to rise from 58.1% to 60%-61% in the current quarter and sees free-cash-flow margin remaining above 30% for the foreseeable future.

“We feel very convicted that that will continue to translate into strong EPS growth,” Tan said, adding that the company would “let the market take care of itself” when it comes to its market capitalization and valuation.

Wedbush Sees Supply Shortage Supporting Demand

Wedbush analyst Matt Bryson maintained an Outperform rating and a $650 price target, citing Western Digital’s strong results and outlook.

Bryson said broader concerns around AI infrastructure spending, rather than company-specific weakness, were weighing on the stock.

He estimated the hard-drive market faces a shortage of roughly 400 exabytes, representing more than 20% of total market capacity, as major cloud customers seek additional storage.

Bryson expects those supply constraints to persist even if power, financing or regulatory hurdles delay some data-center projects.

He also pointed to sub-one-year payback periods for data-center investments at smaller neocloud providers as evidence that demand for compute capacity remains strong enough to support continued infrastructure spending.

Western Digital Stock Analysis

Western Digital shares edged lower in Monday’s premarket trading, bucking a broader market rally. Nasdaq futures climbed about 0.5%, while S&P 500 futures rose 0.32%.

The stock remains below several key moving averages, signaling continued selling pressure.

WDC trades 12.8% below its 20-day simple moving average (SMA) of $395.04. It also sits 20.4% below its 50-day SMA of $433 and 30.2% below its 100-day SMA of $493.56.

Additionally, the 20-day SMA remains below the 50-day SMA, signaling a bearish short-term trend. However, the 50-day SMA remains above the 200-day SMA of $414.65. This suggests the longer-term trend has weakened but has not completely broken down.

Meanwhile, the moving average convergence divergence (MACD) indicator remains below its signal line. The negative histogram also points to fading buying momentum.

As a result, Western Digital could face further selling pressure unless buyers regain control.

Key support stands at $332. A break below this level could open the door to additional losses. However, a recovery above the 20-day and 50-day moving averages could signal improving momentum.

Western Digital Analyst Outlook

Western Digital carries a Buy consensus rating with an average price forecast of $585.57.

UBS maintained Neutral and lowered its forecast to $435 on Oct. 23. Citigroup maintained Buy but cut its forecast to $660, while JPMorgan maintained Overweight and raised its forecast to $650 on the same day.

WDC Price Action: Western Digital shares were down 0.27% at $342.73 during premarket trading on Monday, according to Benzinga Pro data.

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