Goldman Sachs has adjusted its valuation outlook for Western Digital Corp. (NASDAQ:WDC), raising its price target to $220.00 from $165.00 while leaving its recommendation at Neutral. The move comes as the company’s shares trade at $278.41 - markedly higher than both Goldman’s revised target and InvestingPro Fair Value estimates.
The investment bank pointed to Western Digital’s recent quarterly performance and guidance as the primary drivers for the upward revision. Goldman described the quarter as strong and said guidance exceeded market expectations. At the same time, the brokerage noted that investor expectations had already been elevated heading into the report, in part due to strong results from Seagate and rising confidence in sustained pricing and margin momentum amid ongoing hard disk drive - HDD - shortages.
Market pricing has reflected those factors: Western Digital stock has advanced roughly 462% over the past year and the company’s revenue has climbed 75% over the last twelve months, according to Goldman. The stock now commands a price-to-earnings multiple of 38.8 and trades just 1% below its 52-week high of $285.42, having surged from a 52-week low of $28.83.
Goldman Sachs said investor positioning ahead of the earnings release was broadly bullish. That stance was driven by strong capital expenditure and storage demand trends from hyperscalers, alongside tight supply dynamics within the HDD market. The firm described these tailwinds as supportive enough that it raised both its estimates and its price target for Western Digital.
The bank also flagged the company’s plan to accelerate the qualification schedule for Heat-Assisted Magnetic Recording - HAMR - technology to the first half of 2026. Goldman suggested that earlier-than-expected HAMR qualification should act as an incremental growth catalyst in 2027.
Additional market data referenced by the report shows analysts increasing near-term earnings forecasts for Western Digital; InvestingPro data indicates six analysts have recently revised their earnings estimates upward for the upcoming period. However, despite the analyst revisions and the stronger outlook, the stock’s valuation remains relatively high compared with conventional multiples in the sector.
Goldman also reminded investors of Western Digital’s elevated volatility, noting a beta of 1.85. That measure indicates the stock has historically exhibited greater price swings than the broader market.
Recent operating and financial details
Western Digital reported second-quarter fiscal 2026 results that beat consensus expectations. The company posted earnings per share of $2.13, outperforming analyst estimates of $1.91 by 11.52%. Revenue for the quarter reached $3.1 billion, topping projections by 6.16%.
Separately, the company’s industry relationships were highlighted by an extension of a joint venture agreement between KIOXIA and SanDisk at KIOXIA’s Yokkaichi plant. The extension runs through December 31, 2034. Under the terms disclosed, SanDisk will make aggregate payments of $1,165 million to KIOXIA, delivered in installments between 2026 and 2029.
Goldman’s commentary and the financial results underline how supply constraints for HDDs and favorable pricing trends are currently supporting Western Digital’s near-term performance. For investors seeking deeper valuation context, the InvestingPro Pro Research Report offers additional metrics and 19 supplemental ProTips.
What this means for market participants
- Goldman’s raised price target acknowledges recent operational momentum but stops short of a buy recommendation, keeping the stock at Neutral.
- The stock’s current market price sits materially above both Goldman’s target and InvestingPro Fair Value estimates, signaling potential overvaluation relative to those benchmarks.
- Industry dynamics - including hyperscaler demand and tight HDD supply - are cited as primary drivers behind recent upside and analyst estimate revisions.
Investors should note the tension between robust fundamental beats and elevated valuation multiples. The market’s current pricing appears to capture a continuation of favorable supply-demand dynamics and successful technology qualification timelines, but it also places the shares well ahead of institutional valuation targets.