We recently compiled a list of the 10 Best Cheap Technology Stocks To Buy According to Analysts. In this article, we are going to take a look at where Western Digital Corporation (NASDAQ:WDC) stands against the other cheap technology stocks.
Doug Clinton, the founder and CEO of Intelligent Alpha, joined a discussion on CNBC’s ‘Squawk Box’ on February 12 regarding the state of the tech sector, AI tech race, how heavy AI investments and tariff uncertainty have affected mega-cap tech stocks over the past month. When asked to rate how bad it has been on a scale of 1 to 10, Clinton replied that about 2.5 weeks ago, during what he called “Deep Tech Monday,” it was probably around an 8.5 or 9 due to significant pressure. However, since then, things have calmed down following the earnings reports from hyperscalers like Google and statements from industry leaders such as Sam Altman indicating that the capital expenditure boom in AI will continue.
Clinton emphasized that while they remain bullish on tech overall, not all companies are equally leveraged to AI. For instance, Meta is highly exposed due to its leadership in open-source AI with models like Llama. Google and NVIDIA are also heavily tied to AI advancements. On the other hand, Amazon and Apple might have less exposure compared to other hyperscalers. Interestingly, the iPhone maker recently made a deal with Alibaba to integrate their AI models onto iPhones in China. Regarding tariffs and trade tensions with China, Clinton suggested that while these issues should be monitored for hyperscalers who have significant chip production exposure, he does not believe they will be overly impacted by tariffs due to their limited involvement in import/export activities directly affected by tariffs. Instead of focusing heavily on tariff risks at this point, he believes it’s more important for investors to track how well these companies’ AI products evolve and how customers adopt them.
He also expressed skepticism about a protracted trade war with China under Trump’s negotiation tactics. He noted similarities with recent negotiations involving Canada and Mexico where border policies were adjusted without prolonged conflict over tariffs. While acknowledging potential impacts if tensions escalate significantly, particularly affecting chip producers, Clinton does not foresee this as an immediate concern within the next year. If China were involved in a protracted trade war with the US, it could be very bad for some companies. However, Clinton doesn’t think this scenario is likely because Trump often seeks quick negotiating wins rather than prolonged conflicts.
Methodology
We used a stock screener to compile a list of tech stocks with a forward P/E ratio of under 15. We then selected 10 stocks that had high average upside potential (over 30%) and were the most popular among elite hedge funds. The stocks are ranked in ascending order of their average upside potential. We’ve also added the hedge fund sentiment for each stock which was sourced from Insider Monkey’s database.
Note: All data is sourced as of February 13.
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 275% since May 2014, beating its benchmark by 150 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: 11.17
Average Upside Potential: 33.77%
Number of Hedge Fund Holders: 66
Western Digital Corporation (NASDAQ:WDC) develops and sells data storage devices and solutions globally. Its portfolio spans client devices (HDDs and SSDs for PCs, gaming, and mobile), enterprise solutions (HDDs, SSDs, and platforms for servers and AI workloads), and consumer storage (external HDDs/SSDs, removable cards, USB drives, and wireless products).
On February 12, Wells Fargo analyst Aaron Rakers reiterated a Buy rating on the company with an $85 price target. For this sentiment, rakers cited expected revenue growth from increased data storage demand, AI, and autonomous driving advancements. He projected a total addressable market growth from $65 billion in 2024 to $100 billion by 2030.
The company’s HDD business is booming because of the increasing need for data storage in areas like AI and autonomous driving. In FQ2 2025, HDD revenue hit $2.4 billion, a 9% jump sequentially, and a 76% jump year-over-year. Demand for its high-capacity drives is soaring. The company shipped a record 154 exabytes of nearline HDDs, with growth in exabytes shipped up both sequentially and year-over-year. This, combined with higher average prices per unit, led to record gross margins for the HDD segment.
Parnassus Mid Cap Fund re-initiated a position in Western Digital Corporation (NASDAQ:WDC), believing that its earnings potential is underestimated due to the growth of AI and its attractive valuation. It stated the following 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 8th on our list of the best cheap technology stocks to buy according to analysts. While we acknowledge the potential of WDC as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. 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.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
