7 Best Data Storage Stocks To Buy Now

2. Western Digital (NASDAQ:WDC)  

Upside Potential: 53.42%  

Average Analyst Price Estimate: $91.56

Western Digital (NASDAQ:WDC) is a leading data storage solutions provider and offers a broad range of products, including hard disk drives (HDDs), solid-state drives (SSDs), and cloud storage services. The company has been a key player in the digital storage market and serves both consumer and enterprise customers.

Western Digital (NASDAQ:WDC) presents a compelling investment opportunity, particularly in the wake of the recent chip market sell-off. The current dip in its share price offers a chance to buy into a company well-positioned to capitalize on the AI supercycle, which is expected to drive sustained demand for memory chips. This long-term trend, fueled by both enterprise investments and growing consumer demand, is anticipated to push memory prices upward, benefiting Western Digital (NASDAQ:WDC) significantly.

One of the key strengths of Western Digital (NASDAQ:WDC) is its improving gross margin which has reached multi-year highs due to strong memory pricing. This margin expansion is directly contributing to the company and making it a more attractive investment. Furthermore, Western Digital’s (NASDAQ:WDC) substantial debt reduction efforts are noteworthy. Historically burdened by significant debt, the company has used its recent profits to pay down its obligations. Another strategic move that makes it an attractive investment is the planned spin-off of Western Digital’s (NASDAQ:WDC) flash unit, currently a joint venture with Kioxia.

In FQ4 2024, Western Digital’s (NASDAQ:WDC) revenue grew by 41% year over year to $3.76 billion, surpassing expectations of $3.74 billion. The cloud segment revenue increased by 89% year over year to $1.88 billion, which is half of the company’s total revenue. Analysts expect the company to grow its earnings by over 100% this year. The stock is trading at $59.68 as of August 12. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $91.56, which represents a 53.42% upside potential from its current level.