We recently published a list of the 11 Cheap NASDAQ Stocks to Buy According to Hedge Funds. In this article, we are going to take a look at where Western Digital Corporation (NASDAQ:WDC) stands against other cheap NASDAQ stocks.
On April 10, Dan Ives, Head of Global Tech Research at Wedbush Securities, appeared on an interview at CNBC and expressed that the tech sector could be heading into a period of major volatility. Dan Ives addressed the current landscape for technology companies and pointed out that while a temporary pause in tariffs has provided some structure, the sector remains uncertain in general. He noted that even with this framework, large tech purchases are still being downsized or paused, which contributes to ongoing volatility, especially as companies approach earnings season. Many tech firms are either withholding guidance or providing only general outlooks. Ives described the situation as a storm whose full damage is only beginning to be assessed, with the industry still only a quarter of the way through the fallout. He explained the sharp pullback in major tech stocks by likening it to emerging from a storm and confronting the resulting damage.
Ives highlighted that the uncertainty in tech has been amplified by the escalating tariffs on China, which are now as high as 125%, and are a major concern for a lot of companies, as China remains central to the global tech supply chain. Ives also pointed out that the recent tariffs on China have forced companies to reconsider the costs and logistics of importing critical components. For example, a $100,000 part might now cost double due to tariffs, causing companies to halt or delay large investments. This has resulted in a notable pause in tech spending, which he expects to continue at least through the current quarter. He cautioned that the June quarter is likely to be very weak. He maintained that, despite the challenges, he has not downgraded tech stocks, drawing on lessons from the pandemic playbook, where periods of uncertainty eventually led to clear winners and losers. Ives also addressed concerns that tech companies, by pulling back on spending, might risk drawing negative attention from the administration, especially given recent meetings between tech CEOs and the president. He reiterated that China is the epicenter of the current turmoil and that big tech is caught in the middle of a high-stakes situation, with companies still trying to navigate the evolving landscape.
Ives predicted that Street estimates are likely to see earnings cuts of about 10% across internet and big tech companies, which reflects the broader pullback in spending and ongoing volatility.
Our Methodology
We first used the Finviz stock screener to compile a list of cheap NASDAQ stocks that had a forward P/E ratio under 15 as of April 21. We then selected the 11 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
Note: All data was sourced on April 21.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A data center filled with racks of hard disk drives and solid state drives.
Western Digital Corporation (NASDAQ:WDC)
Forward P/E Ratio as of April 21: 7.44
Number of Hedge Fund Holders: 85
Western Digital Corporation (NASDAQ:WDC) develops, manufactures, and sells data storage devices and solutions. It offers client devices, such as hard disk drives (HDDs) and solid state drives (SSDs) for desktop and notebook PCs, gaming consoles, and set-top boxes. It sells its products under the Western Digital, SanDisk, and WD brands to OEMs, distributors, dealers, resellers, and retailers.-
In FQ2 2025, Western Digital’s Cloud revenue reached $2.3 billion, which was 55% of the company’s total revenue of $4.3 billion. This Cloud revenue made a 6% sequential improvement, as well as more than doubled year-over-year, due to an increase in nearline HDD shipments. The HDD business as a whole achieved a 12-quarter high in revenue during this period.
This was driven by the increasing adoption of Western Digital Corp.’s (NASDAQ:WDC) newer and higher-density drives, particularly those using its cutting-edge Ultra SMR technology. On April 10, Benchmark upgraded the stock’s rating to Buy from Hold with a $55 price target. Benchmark cites the growth in data center spending by the major hyperscalers, the AI opportunity, and lower expected interest expense as a reason behind this improved sentiment.
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.”
Overall, WDC ranks 3rd on our list of the cheap NASDAQ stocks to buy according to hedge funds. While we acknowledge the growth potential of WDC, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than WDC but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
