fool.com is drawing attention to Western Digital stock as artificial intelligence continues to drive demand for data-storage capacity. A recent analysis from The Motley Fool suggests that the company could have significant upside over the next three years, with a potential gain of 165% based on projected earnings growth and valuation assumptions.
AI Demand Creates a Storage Boom
AI data centers require enormous amounts of storage to train large language models and support applications that process massive datasets. The surge in AI infrastructure spending has contributed to tighter supplies of hard-disk drives and solid-state storage, creating favorable conditions for storage manufacturers.
Western Digital has benefited from those trends. The company reported fiscal 2026 revenue of $12.9 billion, representing a 36% increase from the previous year. Its non-GAAP operating margin also climbed significantly, reaching 37.3%.
Western Digital Sees Strong Future Demand
The company has indicated that demand could remain strong well beyond the current year. Western Digital previously said its HDD capacity for 2026 was already sold out, while management has also discussed long-term supply agreements covering 2029, 2030 and 2031.
According to the analysis, Morgan Stanley expects the HDD supply cycle to remain favorable through at least 2028. The investment bank estimates annual HDD demand could grow 40% to 50%, compared with supply growth of roughly 30% to 35%. That imbalance could support higher pricing for high-capacity storage drives used in data centers.
Why a 165% Gain Is Being Considered
The bullish case is based largely on Western Digital potential earnings growth. Analysts cited by The Motley Fool expect the company’s earnings per share to rise substantially between fiscal 2026 and fiscal 2029.
The analysis estimates that if earnings reach $44.83 per share in three years and the stock trades at a forward earnings multiple of 26, roughly in line with the Nasdaq-100’s assumed multiple, Western Digital could reach about $1,165 per share. That would represent a potential 165% increase from the price referenced in the analysis.
Investors Still Face Risks
The 165% figure is a projection, not a guaranteed return. Western Digital’s future performance will depend on AI infrastructure spending, storage demand, pricing conditions, supply constraints and the valuation investors are willing to assign to the company.
Still, the combination of rising AI-related storage demand, strong recent financial results and long-term customer commitments has made Western Digital one of the more closely watched names in the storage market. Investors should consider the projection as one possible scenario rather than a certainty and conduct their own research before making investment decisions.
Source : fool.com
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