Western Digital stock price target raised to $87 from $75 at Mizuho

Western Digital (WDC) reported strong Q4 2025 results, with revenue of $2.61 billion and EPS of $1.66, both exceeding analyst expectations, and provided an optimistic September quarter outlook surpassing consensus. This robust performance, driven by strong demand from cloud customers for high-capacity Nearline HDDs (170 exabytes shipped, up 17% QoQ) and a strategic shift towards AI-driven storage, prompted Mizuho to raise its price target to $87 and Rosenblatt to $90, both maintaining positive ratings. WDC's strategic positioning is further bolstered by long-term agreements with major cloud providers and advancements in its UltraSMR and HAMR technologies.

Analysis

Western Digital (WDC) has demonstrated significant operational strength, reporting June quarter revenue of $2.61 billion and Q4 2025 EPS of $1.66, both surpassing consensus estimates. The company's forward guidance for the September quarter is equally robust, with revenue projected at $2.70 billion and EPS at $1.54, again exceeding analyst forecasts. This performance is primarily driven by accelerating demand in the data center market, evidenced by a 17% quarter-over-quarter increase in Nearline HDD shipments to 170 exabytes, with cloud customers constituting approximately 90% of this revenue. Profitability is solid, with a gross profit margin of 28.56% over the last twelve months, supported by a 7% sequential increase in average selling prices. The company's strategic position is reinforced by firm purchase orders and long-term agreements with its five largest cloud service provider customers extending through fiscal 2026, providing substantial revenue visibility. Technological advancements, including the anticipated mix shift toward high-capacity drives due to AI demand and the roadmap for UltraSMR and HAMR technologies, underpin the positive outlook. This fundamental strength has prompted significant price target upgrades from Mizuho (to $87) and Rosenblatt (to $90), although the stock's 58.82% year-to-date surge has led to valuation levels that InvestingPro analysis suggests may be above fair value.

Key Decisions for Investors

• Given the strong earnings beat, positive forward guidance, and long-term cloud agreements, investors could consider maintaining or adding to long positions as the company's fundamental momentum appears robust.
• Despite the bullish outlook, the stock's significant 58.82% year-to-date appreciation suggests new investors should be cautious about entry points and could look for market pullbacks to initiate positions.
• Investors should closely monitor key performance indicators such as Nearline HDD exabyte shipments and average selling prices, as these are critical drivers for sustaining the current growth trajectory and profitability.
• The execution of the technology roadmap, particularly the adoption rate of UltraSMR and progress on HAMR, represents a key long-term catalyst and should be watched as an indicator of sustained competitive advantage.