Western Digital Stock Dips Despite Strong Quarter as Goldman Sachs Lifts Price Target

Western Digital stock (WDC) slipped 1.54% in pre-market trading on Friday despite delivering a robust quarterly performance that prompted Goldman Sachs to substantially raise its price target on the stock.

The decline comes even as the data storage giant maintains an impressive 48% gain year-to-date, reflecting the complex interplay between profit-taking activity and renewed analyst confidence in the company's strategic positioning.

Goldman Sachs analyst James Schneider lifted the firm's price target on Western Digital to $220 from $165 while maintaining a Neutral rating on the shares. The upgrade follows a strong quarterly report that exceeded Street expectations, with the analyst highlighting tight hard disk drive supply conditions and robust hyperscaler demand as key tailwinds supporting the company's near-term trajectory.

The stock traded at $273.25 in early Friday trading, a figure that remains elevated, even above the upgraded Goldman price target this morning.

Western Digital reported revenue of $4.29 billion for the quarter, narrowly surpassing analyst estimates of $4.28 billion. However, earnings per share came in at $1.77, slightly below the consensus forecast of $1.88. Looking ahead, management provided guidance for the current quarter projecting EPS between $0.90 and $1.20 on revenue of $3.75 billion to $3.95 billion, a range that appears to have satisfied market expectations for continued momentum.

A critical factor in Goldman's upgraded outlook centers on Western Digital's accelerated rollout of Heat-Assisted Magnetic Recording technology. The firm noted that management's expedited HAMR deployment adds meaningful upside potential, reinforcing the company's position as a primary beneficiary of favorable pricing dynamics and supply constraints in the storage market. This technological advancement represents a significant competitive differentiator as data center operators seek higher-capacity storage solutions to support artificial intelligence workloads.

Western Digital's strong positioning reflects broader industry dynamics favoring established HDD manufacturers. Tight supply conditions, driven by years of industry consolidation and disciplined capacity management, have created a pricing environment that supports margin expansion. Simultaneously, hyperscale cloud providers continue to demand massive storage capacity to support expanding AI training datasets and cloud services infrastructure.

The disconnect between Western Digital's operational momentum and Friday's modest price decline underscores the challenge of sustaining rally momentum after substantial gains. With the stock up nearly 50% year-to-date, some near-term consolidation may prove healthy even as the fundamental outlook continues to strengthen.