As AI models become larger, inference workloads expand and businesses generate mountains of AI-created content, the amount of data that must be stored, accessed and retained continues to rise. Western Digital Corporation WDC is becoming a durable long-term beneficiary of the data explosion. The shift from AI training to inference and Agentic AI is creating a more persistent and data-intensive storage opportunity. Training creates the initial data foundation, while inference continuously generates and retains prompts, outputs, logs and context.
As Agentic AI expands into multistep workflows, data volumes and retention needs continue to rise. Moreover, physical AI, autonomous vehicles, robotics and industrial automation are driving additional demand for synthetic data generation and storage. Together, these trends could make AI a structural, long-term driver of capacity-oriented storage demand for WDC. As AI workloads shift from deployment to sustained use, storage demand is becoming less about one-time infrastructure builds and more about the compounding of data—a key secular growth driver for WDC. Roughly 80% of hyperscale data-center data remains on HDDs, reflecting their scale, cost efficiency and power advantages for long-term storage.
This trend plays to WDC’s technology strengths. The company began shipping 40TB ePMR drives in June and is ramping volume production, while its 44TB HAMR product remains on track for the first half of calendar 2027. UltraSMR is also expected to account for about 60% of nearline exabyte shipments by the end of fiscal 2027. Beyond capacity, Western Digital is advancing high-bandwidth drives that target up to 8x the throughput of current drives without a comparable increase in power consumption, with sampling underway at five customers.
WDC vs. Rivals: Who is Winning the AI Storage Boom?
Seagate Technology STX is benefiting from the rapid increase in data creation, retention and reuse across cloud and enterprise environments. AI inference and agentic applications require persistent historical context, while physical AI applications such as robotics and autonomous vehicles are expected to generate significant volumes of video and sensor data. These trends reinforce the role of cost-efficient HDDs within tiered storage architectures. Data center revenues increased 57% year over year to $2.93 billion in the June quarter, while nearline exabyte shipments advanced 43% to 195 exabytes. Cloud demand has now increased sequentially for three consecutive years and enterprise OEM demand is also broadening.
NetApp, Inc. NTAP is benefiting from higher enterprise spending on AI-ready storage, with all-flash, Public Cloud and Keystone demand broadening across customer types. Customers are standardizing on NetApp for mission-critical workloads, including GPU-intensive AI pipelines, and reported share gains tied to product innovation and go-to-market execution. It also saw demand across high-performance flash, capacity flash and block-optimized storage as customers modernized adjacent data infrastructure for AI. NetApp is positioning its unified data platform to activate enterprise data for AI without requiring data movement. AI is also driving broader modernization of databases and unstructured data environments, expanding the opportunity beyond dedicated AI infrastructure.
WDC Price Performance, Valuation and Estimates
In the past year, shares of WDC have surged 394.5% compared with the Zacks Computer-Storage Devices industry’s growth of 391.4%.
Image Source: Zacks Investment Research
Going by the price/earnings ratio, the company’s shares currently trade at 20.86 forward earnings compared with 10.67 for the industry.
Image Source: Zacks Investment Research
WDC’s estimate revisions are currently on an upward trajectory. The Zacks Consensus Estimate for WDC’s earnings for fiscal 2027 has been revised upward by 7.5% to $20.03 over the past 60 days, while the same for fiscal 2028 has gone up 7.6% to $34.74.
Image Source: Zacks Investment Research
Currently, Western Digital has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Western Digital Corporation (WDC): Free Stock Analysis Report
NetApp, Inc. (NTAP): Free Stock Analysis Report
Seagate Technology Holdings PLC (STX): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).