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Western Digital stood out in the hardware sector over the past 12 months, with its stock rising about 489% between March 2025 and March 2026, from $44 to $259 per share.
The rally was driven by strong top-line growth and improving profitability. Annual revenues increased 28% to $10.73 billion, while net profit margin expanded from 15% to 35.4%.
Morgan Stanley recently named both Western Digital and Seagate Technology as its highest-rated IT hardware equities. The firm pointed to accelerating artificial intelligence infrastructure investments and expanding cloud data center deployments.
Seagate reported fiscal Q2 revenue of $2.83 billion and earnings per share of $3.11, exceeding Wall Street projections on both measures. Following the results, Cantor Fitzgerald increased its valuation target for the storage company.
For Western Digital, Morgan Stanley highlighted growing conviction around AI-related capital expenditure trends as its core thesis. The analysts also flagged memory chip pricing dynamics and recent share price movements as key items to monitor.
Western Digital’s fiscal 2026 second quarter generated $3.02 billion in revenue, up 25% year over year. The company said the growth was driven primarily by hyperscale cloud providers buying high-capacity hard drives in large volumes.
Western Digital also reported a record non-GAAP gross margin of 46.1% for the quarter, reflecting improved operating performance after the separation of its lower-margin flash memory operations.
In February 2026, Western Digital approved a new $4 billion stock buyback authorization. The company generated $599 million in free cash flow during fiscal 2026’s first quarter to support the program.
During February 2026, Western Digital monetized approximately $3.17 billion of its SanDisk holdings. The proceeds were used to retire long-term debt, and S&P Global Ratings raised Western Digital’s credit rating to BBB-.
After these developments, both Morgan Stanley and Cantor Fitzgerald increased their price objectives for Western Digital.
Despite the positive fundamentals, Western Digital shares have fallen roughly 16% from their 52-week peak. Observers attributed the decline to broader technology sector volatility and investor questions about the implications of the SanDisk divestiture.
Separately, Western Digital’s hard disk drive manufacturing capacity for 2026 is reportedly fully committed under contracts with hyperscale customers.
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