Western Digital’s surge hides risks — is a reversal imminent?

Western Digital reached a record share price on June 18 after climbing 264% year-to-date and about 960% over the past 12 months, pushing its market capitalization above $221 billion. Analysts responding to the rally flagged valuation, industry cycles and technical indicators as potential risks for the stock.

Western Digital manufactures hard disk drives and data-center storage systems used by large cloud providers and PC makers. Customers include major hyperscalers and computer vendors. The company has reported increased demand for data-center capacity and has entered long-term supply agreements with large cloud operators seeking stable storage supply.

In its most recent quarter the company reported revenue of $3.34 billion, a 45% increase year-over-year, and a gross margin of 50.2%. Consensus forecasts expect the current quarter’s revenue to rise about 42% to $3.69 billion, which would bring full-year revenue to roughly $12.87 billion, up about 35% from the prior year. Analysts project next-year revenue near $17.7 billion, or roughly 38% growth.

Several investment banks raised price targets after the recent results. Morgan Stanley and JPMorgan set targets at $650. Mizuho and Citigroup lifted targets to $685, and Barclays set a $620 target. Analysts covering the stock generally project continued double-digit revenue gains in the near term.

Analysts and market technicians pointed to a set of risks. The hard-disk market has a history of supply tightness followed by oversupply, which can produce swings in prices and margins. Western Digital’s forward price-to-earnings ratio is near 67, higher than peers such as Sandisk at about 30 and Micron at about 17, and above the S&P 500 average near 22.

Reports of U.S. data-center project cancellations were identified as a possible near-term demand headwind for suppliers to cloud operators. On the technical side, the stock fell from highs around $800 to a low near $613 before rebounding to about $730 following a competitor’s earnings release. The share price remains well above its 200-day moving average of roughly $317, and some technicians point to a bearish divergence in the Relative Strength Index. Market participants have identified $500 as a notable support level.

David Goeckeler, Western Digital’s chief executive, stated: “The demand drivers are clear: Virtually every AI workload, from training, inference, agentic AI to physical AI, creates data that is stored persistently and cost-efficiently on HDDs.”

Investors and analysts said they will watch upcoming corporate results and customer spending plans to assess near-term revenue and margin trends.