What’s Behind the Jump in Western Digital’s Stock Price?
Western Digital (NASDAQ: WDC) stock surged by over 5% in Tuesday’s trading and remains up by close to 40% over the past month. So what’s driving the stock higher?
Image by K. Mishina from Pixabay
Authorization of Share Purchase Program
Western Digital announced a new $2 billion share repurchase program, reflecting strong confidence in its long-term outlook. Effective immediately, the program allows for share buybacks via open market purchases, private transactions, or under a Rule 10b5-1 plan. This initiative follows the recent launch of a quarterly dividend and reinforces the company’s shareholder-focused capital allocation strategy—prioritizing reinvestment, debt reduction, and capital returns as outlined on Investor Day.
Strong Q3 Earnings
Western Digital (WDC) reported its first full quarter as an HDD-focused company in Q3 FY25, (June year), delivering $2.3 billion in revenue—a 31% year-over-year increase despite a 5% sequential decline. Non-GAAP EPS rose 15% to $1.36, and gross margin improved to 40.1%, up 1.7 points sequentially and 10 points year-over-year. The Cloud segment drove 87% of total revenue, generating $2.0 billion, up 38% year-over-year, fueled by growing data demands from hyperscale cloud providers and AI adoption.
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Positive Guidance
Looking ahead to the fiscal fourth quarter ending June 27, 2025, Western Digital issued an upbeat outlook, projecting revenue of $2.45 billion ± $150 million and non-GAAP EPS of $1.45 ± $0.20—both ahead of analyst estimates. The company expects to sustain strong gross margins between 40.0% and 41.0%, with non-GAAP operating expenses tightly managed in the range of $330 million to $340 million. As AI adoption drives exponential data growth, demand for high-capacity, cost-effective storage continues to rise. Western Digital’s focus on reliable, large-capacity HDDs positions it well to capitalize on this trend.
WDC Stock’s Volatility
The increase in WDC stock over the last 4-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were 18% in 2021, -52% in 2022, 66% in 2023, and 14% in 2024. The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile. And it has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.
We value WDC stock at about $49 per share, which is roughly in line with the current market price. See our analysis on Western Digital’s Valuation: Is WDC Stock Expensive Or Cheap? for more details on Western Digital’s valuation and how it compares with peers.
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