We recently published a list of 15 Tech Stocks with Best Earnings Growth in 2025. In this article, we are going to take a look at where Western Digital Corporation (NASDAQ:WDC) stands against other tech stocks with best earnings growth in 2025.
Earnings growth plays a vital role in global markets and equity investments, directly influencing stock prices and overall market performance. Companies with steady earnings growth are often considered more stable and reliable, attracting investor confidence and strengthening market sentiment. According to FactSet, the S&P 500 is expected to report a 9.5% earnings growth for 2024, surpassing the 10-year average annual growth rate.
Looking ahead, 2025 is projected to outperform 2024 in terms of earnings expansion. In a January 14, 2025 interview on Bloomberg’s ‘Open Interest’, Racquel Oden, HSBC’s U.S. Head of International Wealth and Private Banking, forecasted a 14.8% rise in corporate earnings for the year. She expressed optimism about broader market gains, particularly among the “forgotten 493” in the S&P 500—stocks beyond the high-performing “Magnificent 7.” Oden highlighted that technological advancements will enhance productivity, ultimately driving profitability and economic growth.
Similarly, in another Bloomberg interview in early January, Stephanie Guild, Head of Investment Strategy at Robinhood, discussed the challenges posed by elevated yields on valuations. She emphasized that equities are primarily influenced by three factors: market sentiment, valuation, and earnings growth. While high yields create hurdles, the key question remains whether corporate earnings can outpace the pressure from persistent interest rates. She also pointed out that the direction of earnings growth will largely depend on policies introduced by the new administration. In the short term, interest rates will steer market movements, but over the long run, earnings growth will be the main driver. Guild also highlighted mid-cap stocks as an attractive investment due to their favorable valuations.
Further reinforcing this outlook, FactSet’s February 14 report revealed that eight sectors have reported year-over-year revenue growth for Q4, with the IT sector leading the gains. Conversely, three sectors, led by Industrials and Materials, have shown a decline in revenue. This trend suggests a solid close to 2024 earnings. For 2025, FactSet analysts estimate a 12.7% year-over-year earnings growth.
Our Methodology
To determine the 15 technology stocks with the best earnings growth in 2025, we began by analyzing all U.S.-listed tech companies with a market capitalization of at least $2 billion. To exclude unprofitable companies, we considered only companies that reported a positive net profit margin over the trailing twelve months period. From this refined list, we further narrowed our selection to those expected to achieve greater than 25% EPS growth this year. Regarding next financial year (FY), for firms with more than six months remaining in their fiscal year, we used FY 2025 earnings estimates, while for those with six months or less left, we relied on FY 2026 estimates. Additionally, we considered only stocks with a projected upside of more than 10%. Finally, we ranked the companies in ascending order based on their expected earnings growth for next financial year (FY). We also included data on hedge fund holdings in these companies as of Q4 2024 to provide further insight into investor interest.
Note: All pricing data is as of market close on February 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)
Expected EPS Growth Next FY: 25%
Number of Hedge Fund Holders: 85
Western Digital Corporation (NASDAQ:WDC) is a leading developer and manufacturer of data storage devices and solutions. The company’s product lineup encompasses hard disk drives (HDDs), solid-state drives (SSDs), and external storage systems designed for both consumer and enterprise markets. Western Digital’s storage solutions are utilized in a variety of applications, including personal computing, data centers, and cloud storage services, addressing the growing global need for reliable and high-capacity data storage.
Western Digital Corporation (NASDAQ:WDC) anticipates a 23% compound annual growth rate (CAGR) in installed cloud storage from 2024 to 2028, reaching 19.2 zettabytes, as outlined at its recently held Investor Day. Buoyed by the factors outlined in the event, an analyst at Cantor Fitzgerald reiterated his Overweight rating on the shares as he believes the company’s NAND business spin-off could unlock potential value which is not factored in its current valuation. With the separation now complete, the spun-off NAND business, SanDisk Corp. (NASDAQ:SNDKV), has emerged as an independent publicly traded entity.
Overall, WDC ranks 15th on our list of tech stocks with best earnings growth in 2025. While we acknowledge the potential of WDC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
