WDC
WESTERN DIGITAL CORPNasdaqValuation snapshot
Above bull casePrice is above even the bull case.
Price as of Sep 4, 2026 · Valuation Sep 6, 2026
What drives WDC's base case?
base-case thesisFiscal 2026 sales rose by more than a third, helped by both higher shipment volume and better pricing. Cloud products now produce nearly nine-tenths of sales, and management expects another strong opening quarter. This case assumes that momentum moderates over five years while the company keeps roughly its latest full-year level of profitability.
What shapes the assumptions
Fiscal 2026 exabytes sold increased 25%
Storage volume sold
Raises revenue growth
Fiscal 2026 price per exabyte increased 8%
Revenue per storage unit
Raises operating margin
Cloud produced 89% of fiscal 2026 sales
Cloud sales mix
Raises revenue growth
Capital spending is expected to average 4% to 6% of sales
Long-run investment intensity
Informs reinvestment
Each driver links a business metric to the forecast assumption it shapes — the basis for this case, not investment advice.
Why the gap?
The market is pricing this as if revenue grows 59.0% a year. There is not enough reported history to say how that compares with what it has actually done.
What else could explain it?›
- How confident is this estimate?
- Robustness 53.0/10 (Moderate) — some of any gap is our own uncertainty rather than disagreement.
- What would change the answer?
- Which assumption this valuation swings on, and by how much.
- Share count is still growing
- Diluted shares grew 8.1% year on year. This valuation uses today's share count, not tomorrow's — continued dilution would spread the same value across more shares.
Many combinations of assumptions reproduce the same price. These are ways to read what the market might be expecting, not the market's actual view. How this is worked out
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
View details
Research & assumptions
Inspect the valuation thesis, cases, risks, evidence, and model inputs.
Three independently researched cases generated automatically from published financials. Every assumption is justified and cited; the discount rate is computed from researched market inputs.
Company value drivers
Ranked operating metrics and the valuation assumptions they influence.
2. Annual GAAP operating margin
This shows how much revenue remains after product costs and operating expenses and directly determines operating cash generation.
34.5%
reported3. Annual exabytes-sold growth
This measures physical storage demand independently of pricing and is the clearest operating-volume indicator for future sales.
25.0%
reported4. Annual price-per-exabyte growth
This tracks pricing and product-mix strength per unit of storage, affecting both revenue and profitability.
8.0%
reportedBase inputs from financials
source period →Base revenue (TTM)
$12.9B
Diluted shares
387,000,000
Net cash
$527M
Bear
low confidence$53.51
IV / share
-87.9% vs $441.57
- Explicit cash flows
- $22.90
- Terminal value
- $29.25
- Net cash
- $1.36
- Intrinsic value / share
- $53.51
54.7% of the value rests on the terminal value — elevated dependency.
Revenue growth25.0% → 8.0% → 4.0% → 2.0% → 1.0%medium
How derived: Fiscal 2026 revenue grew 0.36 and management expects first-quarter fiscal 2027 revenue to grow 0.42 to 0.49, but this path assumes customer concentration, industry cyclicality, and normalization of unusually favorable pricing cause growth to decelerate sharply.
Why this confidence: Near-term management guidance ↑, Cyclical five-year forecast horizon ↓
Measured by
- Cloud share of annual revenue88.9%derived
- Annual exabytes-sold growth25.0%reported
- Annual price-per-exabyte growth8.0%reported
- Top-ten customer share of annual revenue73.0%reported
Evidence for
- WD identifies industry cyclicality and the buying patterns of large cloud customers as continuing sources of sales variability.[WD FY2026 Form 10-K]· primary
Evidence against
- Management guided fiscal 2027 first-quarter revenue to approximately $4.1 billion, equivalent to year-over-year growth of 0.42 to 0.49.[WD FY2026 results]· primary
Operating margin26.0%medium
How derived: The annual GAAP margin rose from 0.245 in fiscal 2025 to 0.345 in fiscal 2026, but this case assumes weaker pricing and product mix surrender most of that latest-year improvement.
Why this confidence: Audited annual margin history ↑, Pricing-sensitive cost structure ↓
Measured by
- Cloud share of annual revenue88.9%derived
- Annual GAAP operating margin34.5%reported
- Annual price-per-exabyte growth8.0%reported
- Top-ten customer share of annual revenue73.0%reported
Evidence for
- WD warns that competitive products, pricing, volatile demand, and supply-chain disruptions could adversely affect future results.[WD FY2026 results]· primary
Evidence against
- GAAP operating margin reached 0.417 in fiscal 2026's fourth quarter, up from 0.261 one year earlier.[WD FY2026 results]· primary
Tax rate20.0%medium
How derived: Management guided the next quarter to a 0.17 non-GAAP tax rate, but the bear case moves toward the 0.21 U.S. statutory rate because tax holidays begin expiring in fiscal 2027 and global minimum taxes already apply.
Why this confidence: Explicit near-term company guidance ↑, Unresolved tax-holiday extensions ↓
No tracked driver measures this assumption yet.
Evidence for
- WD says tax holidays begin expiring in the first quarter of fiscal 2027, including a Thailand incentive scheduled to expire on August 31, 2026.[WD FY2026 Form 10-K]· primary
Evidence against
- Management's fiscal 2027 first-quarter outlook uses an approximately 0.17 non-GAAP tax rate.[WD FY2026 results]· primary
Reinvestment rate30.0%low
How derived: WD expects five-year capital spending of 0.04 to 0.06 of revenue and higher fiscal 2027 spending, so this case assumes weaker margins and working-capital efficiency require reinvesting 0.30 of after-tax operating profit.
Why this confidence: Company five-year capital-spending range ↑, Future working-capital needs are not guided ↓
Measured by
- Annual exabytes-sold growth25.0%reported
Evidence for
- WD expects fiscal 2027 capital expenditures to rise as it invests in heads, media operations, and automation.[WD FY2026 Form 10-K]· primary
Evidence against
- WD expects capital expenditures to average only 0.04 to 0.06 of revenue over the next five years.[WD FY2026 Form 10-K]· primary
Terminal growth1.0%low
How derived: Although cloud data creation supports durable storage demand, the mature and cyclical HDD industry, customer concentration, and potential technology substitution justify growth below broad nominal economic growth.
Why this confidence: Clear structural demand rationale ↑, Very long forecast horizon ↓
No tracked driver measures this assumption yet.
Evidence for
- WD states that its HDD business remains exposed to industry cyclicality and buying variability among large cloud customers.[WD FY2026 Form 10-K]· primary
Evidence against
- WD says AI, cloud computing, connected devices, and edge applications are rapidly increasing the volume of digital content requiring storage.[WD FY2026 Form 10-K]· primary
Base
low confidence$103.64
IV / share
-76.5% vs $441.57
- Explicit cash flows
- $40.12
- Terminal value
- $62.15
- Net cash
- $1.36
- Intrinsic value / share
- $103.64
60.0% of the value rests on the terminal value — elevated dependency.
Revenue growth34.0% → 15.0% → 10.0% → 7.0% → 5.0%medium
How derived: The path begins below management's 0.42 to 0.49 first-quarter fiscal 2027 growth outlook, then fades as the fiscal 2026 increases of 0.25 in exabytes and 0.08 in price per exabyte become harder to repeat.
Why this confidence: Near-term guidance and audited volume data ↑, Limited visibility beyond customer agreements ↓
Measured by
- Cloud share of annual revenue88.9%derived
- Annual exabytes-sold growth25.0%reported
- Annual price-per-exabyte growth8.0%reported
- Top-ten customer share of annual revenue73.0%reported
Price implies: 59.0% vs our 14.2% — one of several sets that fit this price
Evidence for
- Fiscal 2026 revenue increased 0.36 as exabytes sold rose 0.25 and average selling price per exabyte rose 0.08.[WD FY2026 Form 10-K]· primary
Evidence against
- WD's top ten customers generated 0.73 of fiscal 2026 revenue, increasing sensitivity to a small number of purchasing programs.[WD FY2026 Form 10-K]· primary
Operating margin34.0%medium
How derived: Fiscal 2026 GAAP operating margin was 0.345 and the fourth quarter reached 0.417, so this case retains the annual result while allowing the unusually strong exit-quarter pricing to normalize.
Why this confidence: Target closely matches audited current-year performance ↑, HDD pricing remains cyclical ↓
Measured by
- Cloud share of annual revenue88.9%derived
- Annual GAAP operating margin34.5%reported
- Annual price-per-exabyte growth8.0%reported
- Top-ten customer share of annual revenue73.0%reported
Evidence for
- Fiscal 2026 GAAP operating margin improved to 0.345 from 0.245 in fiscal 2025.[WD FY2026 results]· primary
Evidence against
- WD attributes the latest gross-margin improvement partly to improved pricing, a factor that can reverse with industry conditions.[WD FY2026 Form 10-K]· primary
Tax rate17.0%medium
How derived: The assumption adopts management's approximately 0.17 fiscal 2027 first-quarter guidance, balancing foreign incentives and credits against global minimum taxes and approaching tax-holiday expirations.
Why this confidence: Explicit management guidance ↑, Long-term jurisdiction and incentive uncertainty ↓
No tracked driver measures this assumption yet.
Evidence for
- Management guided to an approximately 0.17 non-GAAP tax rate for fiscal 2027's first quarter.[WD FY2026 results]· primary
Evidence against
- Several tax holidays expire between fiscal 2027 and 2033, and extensions under discussion were not formally secured when the Form 10-K was filed.[WD FY2026 Form 10-K]· primary
Reinvestment rate24.0%low
How derived: With five-year capital spending guided to 0.04 to 0.06 of revenue and depreciation close to recent capital spending, this case reserves 0.24 of after-tax operating profit for net fixed investment and growth-related working capital.
Why this confidence: Five-year capital-spending guidance ↑, Reinvestment also depends on volatile working capital ↓
Measured by
- Annual exabytes-sold growth25.0%reported
Evidence for
- WD spent $418 million on capital equipment in fiscal 2026 and expects five-year capital spending to average 0.04 to 0.06 of revenue.[WD FY2026 Form 10-K]· primary
Evidence against
- Fiscal 2027 capital spending is expected to be higher because of investments in heads, media, and automation.[WD FY2026 Form 10-K]· primary
Terminal growth2.0%low
How derived: A 0.02 mature growth rate reflects persistent expansion in stored data while remaining conservative about HDD cyclicality, customer concentration, and eventual technological substitution.
Why this confidence: Structural growth in data storage ↑, Terminal assumptions extend indefinitely ↓
No tracked driver measures this assumption yet.
Evidence for
- WD says cloud and AI workloads are accelerating demand for higher-capacity drives and encouraging longer customer arrangements.[WD FY2026 Form 10-K]· primary
Evidence against
- WD identifies competitive products, pricing pressure, demand volatility, and customer purchasing variability as material risks.[WD FY2026 Form 10-K]· primary
Bull
low confidence$167.63
IV / share
-62.0% vs $441.57
- Explicit cash flows
- $59.21
- Terminal value
- $107.05
- Net cash
- $1.36
- Intrinsic value / share
- $167.63
63.9% of the value rests on the terminal value — elevated dependency.
Revenue growth42.0% → 20.0% → 14.0% → 10.0% → 7.0%medium
How derived: The first year uses the low end of management's 0.42 to 0.49 first-quarter growth outlook, followed by a gradual fade that assumes AI-related cloud demand sustains strong exabyte growth and constructive pricing.
Why this confidence: Guided near-term growth range ↑, Aggressive multi-year extrapolation ↓
Measured by
- Cloud share of annual revenue88.9%derived
- Annual exabytes-sold growth25.0%reported
- Annual price-per-exabyte growth8.0%reported
- Top-ten customer share of annual revenue73.0%reported
Evidence for
- Management expects fiscal 2027 first-quarter revenue growth of 0.42 to 0.49 and describes demand visibility as increasing.[WD FY2026 results]· primary
Evidence against
- Three customers individually represented 0.16, 0.15, and 0.13 of fiscal 2026 revenue, making sustained growth dependent on a narrow buyer group.[WD FY2026 Form 10-K]· primary
Operating margin40.0%medium
How derived: The target remains modestly below the fiscal 2026 fourth-quarter GAAP result of 0.417, assuming high-capacity product mix, favorable pricing, and operating leverage persist.
Why this confidence: Recent quarter demonstrates the target is attainable ↑, Only one quarter near the target ↓
Measured by
- Cloud share of annual revenue88.9%derived
- Annual GAAP operating margin34.5%reported
- Annual price-per-exabyte growth8.0%reported
- Top-ten customer share of annual revenue73.0%reported
Evidence for
- Fiscal 2026 fourth-quarter GAAP operating margin reached 0.417, while management guided the next quarter to a 0.55 to 0.56 non-GAAP gross margin.[WD FY2026 results]· primary
Evidence against
- The fiscal 2026 annual GAAP operating margin was lower at 0.345, demonstrating that the fourth-quarter level has not yet been sustained for a full year.[WD FY2026 results]· primary
Tax rate15.0%low
How derived: This case places the sustained rate near the 0.15 global minimum, assuming foreign incentives, FDDEI deductions, and credits offset most pressure from expiring tax holidays.
Why this confidence: Documented tax incentives and credits ↑, Assumption is below current guidance ↓
No tracked driver measures this assumption yet.
Evidence for
- WD benefits from foreign tax incentives, FDDEI deductions, and tax credits, while the OECD framework establishes a 0.15 global minimum in enacted jurisdictions.[WD FY2026 Form 10-K]· primary
Evidence against
- Management's immediate fiscal 2027 guidance is approximately 0.17, and some material tax incentives are expiring or awaiting renewal.[WD FY2026 results]· primary
Reinvestment rate18.0%low
How derived: The case assumes automation, higher-capacity drives, and a five-year capital-spending envelope of 0.04 to 0.06 of revenue allow rapid growth while consuming only 0.18 of after-tax operating profit.
Why this confidence: Automation can improve capital efficiency ↑, High growth may demand more working capital than assumed ↓
Measured by
- Annual exabytes-sold growth25.0%reported
Evidence for
- WD expects five-year capital expenditures to average 0.04 to 0.06 of revenue and is investing in automation to increase productivity.[WD FY2026 Form 10-K]· primary
Evidence against
- Fiscal 2027 capital expenditures are expected to exceed fiscal 2026 as the company expands heads and media investment.[WD FY2026 Form 10-K]· primary
Terminal growth3.0%low
How derived: A 0.03 mature growth rate assumes HDD capacity demand continues expanding with global data creation and AI workloads while remaining below the company's current growth phase.
Why this confidence: Secular cloud-storage demand ↑, Technology and industry structure can change materially ↓
No tracked driver measures this assumption yet.
Evidence for
- WD says HDDs retain a sustainable total-cost advantage for cloud storage and that AI and cloud workloads are accelerating demand for higher-capacity products.[WD FY2026 Form 10-K]· primary
Evidence against
- WD acknowledges competitive technologies, pricing pressure, macroeconomic weakness, and changing customer relationships as long-term risks.[WD FY2026 Form 10-K]· primary
Valuation robustness
reliability of the estimate, not a stock rating53 / 100 · Moderate
Formula v1.0.0. Higher means a more reliable estimate — not a recommendation.
Quality checks
Automated model-risk flags — warnings, not recommendations.
- The reinvestment assumption is low-confidence.→ reinvestment
- The terminal growth assumption is low-confidence.→ terminal growth
- Diluted share count grew 8% year over year, which reduces per-share participation in business growth.→ per-share economics
Per-share economics
Business growth after changes in the diluted share count.
| Period | Revenue growth | FCF/share | FCF/share growth | Shares | Share growth |
|---|---|---|---|---|---|
| Q1 2025 | -19.6% | -0.17 | 92.5% | 357M | 10.5% |
| Q2 2025 | -20.5% | 0.8 | 208.0% | 357M | 9.8% |
| Q3 2025 | 30.9% | 1.06 | 1009.4% | 358M | 6.9% |
| Q1 2026 | 27.4% | 1.59 | 1017.3% | 376M | 5.3% |
| Q2 2026 | 25.2% | 1.71 | 113.2% | 381M | 6.7% |
| Q3 2026 | 45.5% | 2.53 | 138.7% | 387M | 8.1% |
Valuation history every run
History builds as the valuation is recalculated — this is the first recorded run.
Market inputs researched
The 10-year U.S. Treasury par yield was 0.0478 on September 4, 2026 and is used as the nominal U.S.-dollar risk-free rate.
The September 1, 2026 trailing-12-month adjusted-payout implied U.S. equity risk premium was 0.0414.
WDC closed at $467.46 on September 4, 2026, the latest completed trading session preceding the valuation date.
Generated 9/6/2026, 4:34:07 AM · pipeline v1.2.0