The surge in data creation is creating a growing opportunity for storage companies, particularly Western Digital Corporation WDC. The rapid shift from AI training to large-scale inference is driving an explosion in data creation, significantly increasing demand for persistent, scalable, and cost-effective storage—most of which resides on HDDs. Western Digital expects the rise of agentic AI, which autonomously executes workflows, to further accelerate data generation and extend data retention, boosting storage demand across cloud and enterprise environments.
At the same time, synthetic data and physical AI applications, such as robotics and autonomous systems, are creating massive volumes of video, sensor and training data, forming a compounding cycle of data growth. As a result, WDC believes the AI-driven data economy will drive long-term data storage demand at more than 25% CAGR, positioning its high-capacity HDD roadmap to benefit from this trend. WDC’s quarterly trends have shown massive revenue growth, improving gross margins, better pricing discipline and strong enterprise demand. It has also sharpened its focus following the separation of its flash business intoSandisk SNDK, allowing management to concentrate on advancing HDD technologies and serving hyperscale customers more effectively.
Moreover, AI pipelines increasingly demand higher throughput, an area where flash has traditionally dominated. WD has introduced two industry-first technologies that fundamentally change HDD performance dynamics – High Bandwidth Drive Technology and Dual Pivot Technology. High Bandwidth Drive technology is already in customers’ hands for validation, while HDDs featuring Dual Pivot technology remain in the lab and are slated for introduction in 2028. On the other hand, power-optimized drives are expected to be in customer qualification in 2027, effectively creating a new economic storage tier between warm and cold data, critical for sustainable AI deployments at scale.
However, Western Digital competes with well-funded rivals like Seagate Technology Holdings plc STX in HDDs and several major NAND manufacturers in flash technologies.
AI Presents Huge Potential: Can WDC Outpace Peers?
The rise of AI-driven inference workloads is increasing demand for both cloud and edge storage, with growing interest from sovereign and neo-cloud data centers in Seagate’s enterprise nearline drives and storage systems. Seagate is capitalizing on this trend through its focus on areal-density innovation rather than unit-volume growth. Its HAMR-based Mozaic platform exemplifies this strategy, with the second-generation Mozaic 4+ delivering up to 44TB per drive—more than 30% higher capacity than the first generation. Enhanced by Seagate’s proprietary laser and integrated photonics technology, the platform improves storage density, cost efficiency and scalability, supporting the company’s targeted mid-20% annual data-center exabyte growth.
Sandisk is benefiting from AI-led demand that is lifting enterprise SSD adoption and supporting pricing across NAND end markets. NAND is becoming a critical part of AI inference architectures such as KV cache and RAG, which expands low-latency flash needs beyond the model itself. In February 2026, Sandisk and SK hynix launched a joint initiative to standardize High Bandwidth Flash, a next-generation memory solution designed for the growing demands of AI inference. The effort reflects a broader industry shift from AI model training to inference, where efficient memory systems are critical to handle increasing data workloads and enable future AI infrastructure growth.
WDC Price Performance, Valuation and Estimates
In the past year, shares of WDC have surged 586.5% compared with the Zacks Computer-Storage Devices industry’s growth of 381.6%.
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Going by the price/earnings ratio, the company’s shares currently trade at 24.35 forward earnings compared with 10.63 for the industry.
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WDC’s estimate revisions are on an upward trajectory currently. The Zacks Consensus Estimate for WDC’s earnings for fiscal 2026 has been revised north by 0.4% to $10.06 over the past 60 days, while the same for fiscal 2027 has gone up 8.4% to $18.64.
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Currently, Western Digital has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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This article originally published on Zacks Investment Research (zacks.com).