Western Digital gains 333% YTD as HDD demand fuels AI storage boom

Western Digital posted 45% year-over-year revenue growth in fiscal Q3 as hyperscalers bought hard disk drives for AI data storage.

"Virtually every AI workload, from training, inference, agentic AI to physical AI, creates data that is stored persistently and cost-efficiently on HDDs," Chief Executive Officer Irving Tan said.

Revenue reached about $3.34 billion in the quarter ended March 31, with 11% sequential growth. The company guided fiscal Q4 revenue of $3.65 billion, representing 9.4% sequential growth. Net profit margin stood at 53.9%, according to Simply Wall St data.

Western Digital shares have gained 333% year to date, giving the San Jose-based company a market capitalization of about $257 billion. The stock has risen 1,103% over the past 12 months, from about $58 to more than $700. The results show hard disk drives have become a critical layer of AI infrastructure as cloud providers build out data centers.

The company's enterprise hard disk drive segment generates about $11.8 billion in annual revenue, according to filings. Western Digital's UltraSMR technology has secured multiyear commitments from large cloud clients, the company said. The spin-off of Sandisk earlier this year sharpened Western Digital's focus on HDD and related data center platforms.

A storage shortage has pushed up prices across the sector, benefiting core suppliers. Hyperscaler earnings calls have highlighted bottlenecks in memory and storage, with companies racing to secure capacity for AI workloads. Western Digital's enterprise HDDs are a key component in this supply chain.

Grand View Research projects the AI market will grow at a 30.6% compound annual rate through 2033, with 809 data centers planned globally. Each facility requires high-capacity storage, and Western Digital stands to benefit from the build-out alongside peers Sandisk and Seagate. Sandisk has gained 820% year to date with a $305 billion market cap, while Seagate has risen 712% to a $250 billion valuation. Micron Technology recently achieved a $1 trillion market cap, showing the broader storage sector's AI-driven momentum.

Western Digital's reliance on a small group of hyperscale customers and its debt-funded capital structure represent risks, according to Simply Wall St. The company's cash flow quality and customer concentration warrant scrutiny, though multiyear contracts provide some revenue visibility. The stock trades at a high price-to-earnings multiple, reflecting the growth expectations already priced in.

The guidance raise suggests management expects AI-driven storage demand to accelerate. Investors will watch the fiscal Q4 report for updates on segment margins and hyperscaler contract renewals.

This article is for informational purposes only and does not constitute investment advice.