Western Digital Stock Rises on Strong Earnings and Share Buyback Program
Western Digital (NASDAQ: WDC) surged by over 5% in Tuesday’s trading, continuing its upward trend with nearly a 40% increase over the past month. What is behind this notable rise?
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New Share Buyback Program Announced
Western Digital has initiated a $2 billion share repurchase program. This decision indicates a robust confidence in the company’s long-term prospects. The program, effective immediately, will enable share buybacks through open market purchases, private transactions, or a Rule 10b5-1 plan. This initiative follows the recent establishment of a quarterly dividend and underscores the company’s strategy of prioritizing shareholder returns alongside reinvestment and debt reduction, as detailed on Investor Day.
Q3 Earnings Highlight Growth
In its Q3 FY25 report (June year), Western Digital showcased strong results. The company reported $2.3 billion in revenue, marking a 31% increase year-over-year, despite a 5% sequential decline. Non-GAAP earnings per share (EPS) rose by 15% to $1.36, and gross margins improved to 40.1%, reflective of a 1.7 percentage point increase sequentially and a significant 10 points improvement year-over-year. Notably, the Cloud segment was a significant driver of revenue, accounting for 87% of the total revenue with $2.0 billion generated, a remarkable 38% growth year-over-year, fueled by increasing demand.
Western Digital Forecasts Strong Revenue Growth Amid AI Demand
Positive Guidance
Looking ahead to the fiscal fourth quarter ending June 27, 2025, Western Digital issued an optimistic outlook. The company projected revenue of $2.45 billion ± $150 million and a non-GAAP EPS of $1.45 ± $0.20, both surpassing analyst estimates. Western Digital also expects to maintain strong gross margins between 40.0% and 41.0%, while managing non-GAAP operating expenses tightly within the range of $330 million to $340 million. As AI adoption drives significant data growth, the demand for high-capacity, cost-effective storage is on the rise. Western Digital’s emphasis on reliable, large-capacity HDDs positions it well to benefit from this trend.
WDC Stock Volatility
The performance of WDC has shown notable volatility over the past four years, with annual returns fluctuating significantly compared to the S&P 500. Returns for WDC stock included 18% in 2021, -52% in 2022, 66% in 2023, and 14% in 2024. In contrast, the Trefis High Quality (HQ) Portfolio, comprising 30 stocks, has experienced considerably less volatility and has outperformed the S&P 500 during this period. HQ Portfolio stocks have delivered better returns with reduced risk, providing stability against market fluctuations.
We currently value WDC stock at approximately $49 per share, consistent with its current market price. For further details on Western Digital’s valuation and its comparison with peers, see our analysis on Is WDC Stock Expensive Or Cheap?.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
