Western Digital Is Riding the AI Boom. Does This Rocketship Ride Ever End?[Stocks](https://moneymorning.com/category/article/stocks/) # Western Digital Is Riding the AI Boom. Does This Rocketship Ride Ever End?  by Rich Duprey  January 16, 2026  Share it: **Western Digital**( [WDC](https://moneymorning.com/stocks/wdc/)) capped 2025 as one of the **S&P 500**'s top-performing stocks, surging an astounding 282% and outpacing the index's 16% gain. It was only edged out by **SanDisk** ( [SNDK](https://moneymorning.com/stocks/sndk/)), which it had spun off earlier in the year and which rode similar AI-driven tailwinds. This momentum has spilled into 2026, with WDC shares climbing 29% in just the first two weeks of the year. Wall Street is fully on board, with analysts repeatedly hiking price targets as the stock blasts through prior levels. Yet, amid this rocket-like ascent, investors are wondering whether this AI-fueled ride can continue, or is a sudden crash landing on the horizon? ## Fueling the Ascent: Partnerships with Hyperscalers WDC's surge is powered by its pivotal role in the AI data explosion, particularly through deepening ties with hyperscalers – the massive cloud providers like **Amazon** ( [AMZN](https://moneymorning.com/stocks/amzn/)), Google, and **Microsoft** ( [MSFT](https://moneymorning.com/stocks/msft/)) that crave ever-greater storage capacity. These partnerships are fortifying WDC's competitive moat, as AI applications, including multimodal large language models and agentic systems, generate unprecedented data volumes. All seven of WDC's top hyperscaler customers have issued purchase orders for next-generation Heat-Assisted Magnetic Recording (HAMR) drives through the first half of 2026, with five extending through the full year and one securing supply into 2027. WDC fills this need with cutting-edge solutions like enterprise Perpendicular Magnetic Recording (ePMR) drives, offering up to 26 terabytes (TB) in conventional magnetic recording (CMR) and 32TB in Ultra Shingled Magnetic Recording (UltraSMR) formats. Shipments of these exceeded 2.2 million units in the September quarter alone. HAMR technology, set for a volume ramp-up in early 2027, promises even higher capacities. Hyperscalers turn to WDC for its reliability, scalability, and superior total cost of ownership (TCO), which optimize massive data center builds as AI demands soar. This positions WDC as a go-to supplier in a market where data growth shows no signs of abating.  ## Analysts Keep Raising the Bar Bullish sentiment is echoed on Wall Street, where analysts are scrambling to keep up with WDC's momentum. **Wells Fargo** recently boosted its target from $180 to $260, implying 21% upside from pre-upgrade levels, while maintaining an overweight rating. **Barclays** reiterated its overweight call, lifting its target to $240 from $200. Last month, **Morgan Stanley** hiked its target to $228. With shares jumping over 4% in premarket trading today to around $231 – already surpassing Morgan Stanley's mark – more upgrades could follow as earnings revisions trend upward. The consensus remains a strong buy, with targets averaging $183.50 but climbing. ## Bottom Line Despite a 368% gain over the past year, WDC trades at a discounted 23x forward earnings and less than 1X its long-term earnings growth rate of 33%. The AI data center buildout shows no slowdown – **Taiwan Semiconductor Manufacturing**'s ( [TSM](https://moneymorning.com/stocks/tsm/)) earnings yesterday suggests it is actually picking up steam. With robust hyperscaler orders and innovative tech like HAMR on deck, WDC appears to have plenty of fuel left in the tank for a continued ascent. **Beat the market, without relying on brokers or biased institutions.** Email(Required) X/Twitter This field is for validation purposes and should be left unchanged. Subscribe By submitting your email address, you will receive a free subscription to _Money Morning!_ and occasional special offers from us and our affiliates. You can unsubscribe at any time and we encourage you to read more about our [Privacy Policy](https://moneymorning.com/privacy/). ## One moment, please: Processing your submission ###### More Trending Stories from Money Morning - [Here's Why ACM Research Is a Buy Despite Its Earnings Miss](https://moneymorning.com/2026/03/01/why-acm-research-is-a-buy-despite-earnings/) - [$10,000 Invested in MercadoLibre 5 Years Ago Would Be How Much?!](https://moneymorning.com/2026/02/27/10000-invested-in-mercadolibre-5-years-ago-would-be-how-much/) - [Is a Buyout the Hope PayPal Investors Have Been Waiting For?](https://moneymorning.com/2026/02/27/is-a-buyout-the-hope-paypal-investors-have-been-waiting-for/) - [Here's Why ACM Research Is a Buy Despite Its Earnings Miss](https://moneymorning.com/2026/02/27/heres-why-acm-research-is-a-buy-despite-earnings/) - [Axon Enterprise Stuns the Market With Huge Q4 Earnings Beat](https://moneymorning.com/2026/02/27/axon-enterprise-stuns-the-market-with-huge-q4-earnings-beat/) Share it: ### Popular Articles ###### [Here's Why ACM Research Is a Buy Despite Its Earnings Miss](https://moneymorning.com/2026/03/01/why-acm-research-is-a-buy-despite-earnings/) March 1, 2026 ###### [$10,000 Invested in MercadoLibre 5 Years Ago Would Be How Much?!](https://moneymorning.com/2026/02/27/10000-invested-in-mercadolibre-5-years-ago-would-be-how-much/) February 27, 2026 ###### [Here's Why ACM Research Is a Buy Despite Its Earnings Miss](https://moneymorning.com/2026/02/27/heres-why-acm-research-is-a-buy-despite-earnings/) February 27, 2026 ###### [Axon Enterprise Stuns the Market With Huge Q4 Earnings Beat](https://moneymorning.com/2026/02/27/axon-enterprise-stuns-the-market-with-huge-q4-earnings-beat/) February 27, 2026 Notifications reCAPTCHA Recaptcha requires verification. [Privacy](https://www.google.com/intl/en/policies/privacy/) \- [Terms](https://www.google.com/intl/en/policies/terms/) protected by **reCAPTCHA** [Privacy](https://www.google.com/intl/en/policies/privacy/) \- [Terms](https://www.google.com/intl/en/policies/terms/)