Western Digital (WDC) came under pressure after Google introduced its TurboQuant compression algorithm, a tool designed to cut memory usage for large AI models and prompting investors to reassess demand for memory hardware.

The recent pullback around Google’s TurboQuant news comes after a strong run, with Western Digital’s 90 day share price return of 51.67% and a very large 1 year total shareholder return. Shorter term momentum looks choppy, while longer term performance remains strong.

If you are watching how AI hardware stories impact storage names, it can also be useful to widen your search across other AI related infrastructure opportunities by checking out 35 AI infrastructure stocks

After a 51.67% gain in 90 days and a very large 1-year total return, plus fresh questions around AI memory demand, is Western Digital still mispriced or are markets already factoring in all the future growth?

Most Popular Narrative: 14.2% Undervalued

Western Digital’s most followed narrative pegs fair value at $321, above the last close at $275.34, which puts that recent AI driven pullback into context.

Western Digital has successfully rebranded itself as the "Pure-Play" king of mass-capacity storage. By shedding the volatile NAND Flash segment, the company has allowed its Nearline HDD business to shine as the fundamental backbone of the AI data economy.

Want to see how a storage pure play gets to that higher value? The narrative leans on rapid earnings expansion, richer margins and a future earnings multiple that assumes HDDs stay central to AI data growth.

Result: Fair Value of $321 (UNDERVALUED)

However, this depends on hyperscalers remaining fully committed to HDD-heavy AI buildouts and on Western Digital keeping pace with HAMR while maintaining tight capex.

Another Angle on Value

That $321 fair value narrative sits alongside a different message from the numbers. Western Digital trades on a P/E of 23.7x, which is richer than both its peer group at 21.4x and the wider Global Tech average at 21.9x, yet below a fair ratio of 40.1x that the market could move toward.

Is this price simply reflecting momentum and strong recent results? Or does the gap to that higher fair ratio hint at more room to run if earnings hold up? What would need to change in the story for the market to re-rate the multiple either way?

Next Steps

Given the mix of optimism and caution running through this story, it makes sense to move quickly, review the data yourself, and weigh both sides using the 2 key rewards and 3 important warning signs

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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.