What Could Lift Western Digital Stock

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Western Digital (WDC) stock returned 217.1% in the year to October 29, 2026, compared with 13.3% for the S&P 500. Since July 31, however, the shares have lost 27.4%. Which part of Western Digital's business would have to keep growing for the shares to climb again?

Western Digital's Upside Comes From Sales To Cloud Customers

Management said on the October 22 call that cloud revenue made up 88% of Western Digital's total in fiscal Q1 2027 and this segment rose 54% from a year earlier on demand for high-capacity nearline hard disks.

A company with most sales in one segment rises or falls with it. As a case in point, Tesla drew 98% of last quarter's deliveries from two models, and its deliveries fell two years in a row. Read Trefis Big Story: How Tesla Blundered.

A Trefis scenario built on WDC's own figures models the entire gain coming from higher revenue. Trefis takes nine-tenths of the latest twelve-month revenue growth of 43.0%, caps it at 30% a year, and projects revenue at that rate. Under these assumptions, the shares would be worth about 44.9% more than the October 29 close in three years.

The table below compares today's figures with the scenario's estimates three years out.

Revenue more than doubles in this model. Its $16.9 billion of earnings is above the roughly $10.0 billion of operating profit the table implies, because the scenario grows today's non-operating income along with the business. The upside would be even larger without the lower operating margin and P/E that Trefis assumes.

How Is Western Digital Growing Its Sales?

Western Digital is shipping more storage and charging more for it. On the October 22 call, management said the company delivered 22% more exabytes of storage in fiscal Q1 2027 than a year earlier and its average price per terabyte rose 28% over the same period. Management credited both for the 55.5% rise in revenue that quarter.

Management expects more of both for now. The company anticipates faster exabyte supply growth through fiscal 2027 and 2028 as it moves to new products. These include HAMR products, which management expects to ship in volume during the first half of calendar 2027. Western Digital also sees room to raise prices further over the next three or four quarters, though it faces higher costs for the DRAM and NAND inside its hard disks. The company issued a revenue guide for fiscal Q2 2027 that is up about 69% from a year earlier at the midpoint. This forecast sits well above the scenario's yearly pace, but it applies to a single quarter rather than a three-year span.

How Does Western Digital's Upside Change In Different Scenarios?

The table below alters one assumption at a time while keeping the others as they appear in the scenario.

Western Digital's current twelve-month operating margin is the highest recorded at any of its 40 fiscal quarter ends dating back to fiscal Q2 2017. In that span, the figures mix years before Sandisk was spun off from Western Digital in early 2025 with later ones, so older figures are not on the same basis as today's. To set the margin three years out, Trefis takes 70% of today's figure and adds 30% of its average from the earlier quarter ends back to September 2023. That earlier period opened with an operating loss, on figures that predate the early-2025 Sandisk spin-off, so this average likely understates the margin of today's business.

Western Digital's P/E of 14.6 sits below its 20.8 average across the last nine fiscal quarter ends. But about $4.8 billion of its $9.90 billion twelve-month net profit came from non-operating income rather than the business. Without that income, the P/E would be about 28, above that average. This multiple is measured on twelve-month net profit, which came in above operating profit. On operating profit alone, the P/E would be higher. Trefis assumes a lower P/E three years out because the scenario's growth is slower than the company's recent pace. Trefis also holds the share count at today's level. The diluted count, however, rose 18.9% between fiscal Q1 2024 and fiscal Q1 2027, and a rising count leaves each share with less.

Three years of owning the shares would return nothing under these assumptions if revenue grew 14.9% a year, compared with 43.0% over the latest twelve months. The shares would also return nothing if the operating margin fell to 21.8% three years out, compared with 40.7% today. A P/E of 8.6 three years out would produce the same result.

Western Digital's cloud revenue growth from a year earlier is the number to watch when the company next reports, expected in January 2027.

Does This Mean You Should Act On WDC?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices - the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.

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