Western Digital (NASDAQ: WDC) fell 32.4% in three months, from a cited $563.14 to $380.71, even as it delivered five consecutive earnings beats. The selloff reflects concern that a planned increase in competing hard-disk-drive (HDD) capacity could end the supply shortage that has supported pricing and margins—not a collapse in the company’s latest operating results.
A 26-analyst consensus target cited in 2026 was $668.50, or 75.6% above $380.71. Melius Research analyst Ben Reitzes published a Street-high $1,050 target, equivalent to 175.8% upside from that quoted price. That figure is an analyst scenario, not a promised or realized return, and it depends on tight supply, sustained AI-driven demand and successful product launches.
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What drove the 32.4% decline?
Reports in 2026 put WDC at $380.71 after a fall from $563.14 over roughly three months. The timing is striking because fiscal fourth-quarter revenue reached $3.75 billion and earnings per share were $3.56, above the $3.29 estimate cited by 24/7 Wall St. and Yahoo Finance. The company also recorded five straight earnings beats.
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Random freezes, missing sound and display glitches usually trace back to one bad driver. Find and replace yours safely.Free scan · under a minuteThe market is looking beyond the last quarter. HDD suppliers have benefited from limited industry capacity while hyperscale data centers build storage for artificial-intelligence workloads. Investors now fear that additional manufacturing capacity will weaken that pricing environment before the demand cycle has fully matured.
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Western Digital’s gross margin increased from 43.9% to 54.4% across fiscal 2026, and management guided to 55%–56% in the current quarter. Those figures show why a supply-led price reversal matters: even a modest decline in price per terabyte could have an outsized effect on a business whose recent margin expansion has been unusually strong.
Why the bullish targets remain plausible
Near-term revenue and cost trends
For the first quarter of fiscal 2027, management’s guidance called for approximately $4.10 billion in revenue and $4.00 in EPS. Price per terabyte was described as rising in the high teens year over year, while cost per terabyte was falling approximately 8%. If those trends persist, Western Digital can grow profit without relying solely on higher unit volumes.
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AI and hyperscale storage demand
Management estimates that roughly 80% of the data stored in a hyperscale data center resides on HDDs. Flash storage handles latency-sensitive work, but HDDs remain the lower-cost medium for the large data sets used for training archives, inference histories, backups and other capacity-heavy applications. That division gives Western Digital exposure to AI infrastructure spending even when its products are not the component doing the fastest computation.
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Higher-capacity drives and contracted visibility
The company’s stated roadmap includes a 40TB ePMR drive ramp and a 44TB HAMR drive targeted for the first half of calendar 2027. Higher-capacity units let data-center operators store more information in the same physical footprint and can improve economics for both buyer and manufacturer.
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Customer interest in long-term agreements was described as extending into 2029–2031. Such commitments can improve revenue visibility, although they do not eliminate renegotiation, execution or concentration risk.
What the 175% figure actually means
Reitzes’ $1,050 target is calculated against the quoted $380.71 share price: ($1,050 − $380.71) ÷ $380.71 equals approximately 175.8%. It is the highest target cited among the 26 analysts in the reports. The consensus target of $668.50 implies approximately 75.6% upside.
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Reaching $1,050 would require more than one strong quarter. The target assumes a supply-constrained HDD market, continued high-teens pricing growth, successful 40TB and 44TB launches, durable hyperscale demand and margins near the guided range or better. It should therefore be read as a scenario with explicit conditions, not as a forecast that investors are entitled to receive.
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1Fix the driver behind crashes, sound loss and screen glitches2Repair Windows errors before they cause bigger problems3Scan for outdated or missing drivers - takes under a minuteThe central risk: a supply-cycle reversal
Toshiba reportedly planned to spend about ¥60 billion (approximately $380 million) to double HDD production capacity by fiscal 2027. More capacity could loosen the market, reduce price per terabyte and compress gross margin. The same supply discipline that supports the bullish thesis becomes a liability if new output arrives faster than customer demand.
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Large hyperscale customers are another pressure point. They provide scale and visibility, but a concentrated buyer base can use volume commitments to negotiate lower prices. The $1,050 case is especially exposed because it requires the supply-constrained conditions that Toshiba is working to end.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How WDC compares with nearby alternatives
| Company | Evidence cited in 2026 reports | What it tells investors | Important limitation |
|---|---|---|---|
| Western Digital | 32.4% three-month decline; fiscal Q4 revenue $3.75 billion; gross margin 54.4% in fiscal 2026; Q1 FY27 guidance of about $4.10 billion revenue and $4.00 EPS | High operating momentum and substantial sensitivity to HDD pricing | Targets depend on supply remaining tight and roadmap execution |
| Seagate | Reported down alongside WDC amid supply fears; specific percentage and price were not stated | Confirms that the concern is an industry HDD issue, not solely a Western Digital problem | No comparable target or operating figures were provided in the cited material |
| NetApp | Rose 20.2% in one month and traded above its cited $211.69 consensus target | Shows that investors were rewarding some storage exposure while HDD names sold off | NetApp has a different business mix, so its performance is not a direct measure of HDD demand |
Indicators to monitor before treating the selloff as an opportunity
- Price per terabyte: Check whether the high-teens year-over-year increase continues or reverses as new capacity appears.
- Cost per terabyte: Watch whether the approximately 8% decline is sustained; weaker cost reductions would reduce the benefit of stable pricing.
- Gross margin: Compare reported results with the 55%–56% current-quarter guide. A miss would signal that the favorable mix or supply environment is fading.
- Capacity timing: Follow Toshiba’s fiscal-2027 expansion and any evidence that industry output is arriving ahead of orders.
- Roadmap execution: Look for confirmation that 40TB ePMR is ramping and that the 44TB HAMR launch remains on track for the first half of calendar 2027.
- Customer commitments: Distinguish firm, multi-year agreements from general interest; contracts reaching 2029–2031 matter only if pricing terms protect economics.
Where an external drive fits—and where it does not
Western Digital’s G-DRIVE line is positioned as unified external storage for content creators and other creative professionals following the SanDisk Professional separation. A Western Digital external hard drive can be a practical choice for local backups, media libraries and project archives, where high capacity and low cost per terabyte matter more than SSD-level latency.
That consumer or creator use case is separate from the stock thesis. Buying an external HDD does not provide evidence that hyperscale contracts, margins or share-price targets will be achieved; those depend on the data-center business, industry supply and execution.
Is Western Digital a buy after the selloff?
The numbers support a recovery case, but they do not settle the decision for every investor. WDC is more attractive to someone willing to accept cyclical supply risk in exchange for AI and hyperscale storage exposure. Investors who need predictable margins or who cannot tolerate a second leg down if HDD pricing weakens should treat the analyst targets cautiously.
The most defensible reading is that the selloff has lowered the entry price while making the key uncertainty clearer: Western Digital’s earnings are improving, but the valuation upside depends on whether demand can stay ahead of new HDD supply through the next product cycle.
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