Western Digital (WDC) is back in focus after Computex 2026, where the company framed AI infrastructure as a data problem and showcased new high capacity HDDs and platforms built specifically for large scale AI and cloud workloads.

All this attention around AI storage is arriving as Western Digital’s share price return has surged, with a 1 day move of 6.35% and a 90 day share price return of 96.68%, while the 1 year total shareholder return is very large, pointing to strong momentum built over the past year.

If you want to see what else is moving as AI infrastructure spending ramps up, take the next step and scan 48 AI infrastructure stocks

With Western Digital now trading around US$562.93 after a huge run and analysts sending mixed signals between price targets and cash-flow-based fair value, the key question is simple: is there still mispricing here, or is the market already paying up for future growth?

Most Popular Narrative: 8.6% Overvalued

The most followed Western Digital narrative pegs fair value at $518.26 using an 8.44% discount rate, versus the latest close at $562.93, and frames that gap around AI driven storage demand.

The explosive increase in unstructured data generated by AI applications, Agentic AI, and cloud-based services across industries is driving unprecedented storage needs. Western Digital's deep integration with leading hyperscalers (e.g., all top 5 with firm POs/LTAs covering the next 12 to 18 months) positions the company to benefit from secular demand, directly fueling higher long-term revenue growth.

Want to see what underpins that valuation gap? The narrative leans on fast revenue expansion, thick margins, and a future earnings multiple that assumes durable AI storage demand.

Result: Fair Value of $518.26 (OVERVALUED)

However, this hinges on concentrated hyperscaler demand and smooth adoption of new HDD technologies. Any contract shifts or slower product ramps could quickly challenge that thesis.

Another View: Multiples Point To A Very Different Story

The AI narrative pegs Western Digital at about 8.6% overvalued versus a fair value of $518.26, yet current valuation checks paint a sharp contrast. The stock trades at a P/E of 30.6x, below peers at 57.1x and below an estimated fair ratio of 56.4x.

In plain terms, the market is pricing Western Digital richer than the broader Global Tech industry at 23.7x, but well below both peer averages and that fair ratio anchor. This suggests investors are already discounting a lot of risk. The question is whether you see that gap as a cushion or a warning sign.

Next Steps

The mixed signals on value and AI storage potential can feel exciting and uncertain, so do not wait to check the details for yourself. A useful place to start is by weighing up the 3 key rewards and 2 important warning signs.

Looking for more investment ideas?

If Western Digital has your attention, do not stop here. Broaden your watchlist now so you are not late to the next compelling setup.

• Target resilient return potential by scanning 71 resilient stocks with low risk scores that may hold up better when conditions become choppy.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.