7 Best Cheap Technology Stocks To Buy According to Hedge Funds

3. Western Digital Corp. (NASDAQ:WDC)

Forward Price-to-Earnings Ratio: 8.18

Number of Hedge Fund Holders: 80

Western Digital Corp. (NASDAQ:WDC) is a computer drive manufacturer and data storage company that designs, manufactures, and sells data technology products, including data storage devices, data center systems, and cloud storage services. These products are used in a variety of applications, including personal computers, data centers, and enterprise storage systems.

The iNAND MC EU511 embedded flash drive (EFD) is a standout product designed for next-generation 5G mobile devices. As 5G networks offer faster speeds and lower latency, the demand for high-capacity storage to manage IoT data increases. The company’s iNAND MC EU551 and EU311 models provide superior read and write speeds, making them ideal for data-heavy applications.

In the fourth quarter of fiscal 2024, it reported revenue of $3.76 billion, which shows a 40.87% year-over-year increase.  The cloud segment revenue increased by 89% year-over-year, making up 50% of the company’s total revenue, driven by higher near-line shipments and pricing in HDD, along with increased bit shipments and pricing in enterprise SSDs. Client represented 32% of total revenue, up 16% year-over-year driven by higher flash ASPs. Consumer represented 18% of total revenue, up 5% driven by improved flash ASPs and bit shipments.

Analysts expect the company to grow its earnings by over 100% this year, as the AI Data Cycle is transforming the industry, increasing the need for storage.

Western Digital Corp. (NASDAQ:WDC) has made significant strides in innovation. The company has launched new high-capacity SSDs for gaming and enterprise applications. Its strong presence in the enterprise SSD market has driven revenue growth, especially due to increasing demand for cloud storage solutions.

Parnassus Mid Cap Fund stated the following regarding Western Digital Corporation (NASDAQ:WDC) in its Q2 2024 investor letter:

“We re-initiated a position in Western Digital Corporation (NASDAQ:WDC), a manufacturer of memory semiconductor chips and hard disk drives, as we believe earnings expectations are far too low. Semiconductors have been another of our most-alpha-generative industries, thanks to the industry’s secular tailwinds and our in-house expertise. Western Digital stands to benefit from the rapid growth of memory-hungry AI applications. The valuation for Western Digital was low relative to its peers, giving us a way to participate in AI at a reasonable valuation.”