1. Western Digital Corporation (NASDAQ:WDC)
Growth Investment Ratio: 532%
Number of Hedge Fund Holders: 80
Western Digital Corporation (NASDAQ:WDC) is one of the oldest and most well-known data storage products companies in the world. It makes and sells computer storage devices such as solid-state drives and hard disk drives. Even though the booming artificial intelligence industry requires copious amounts of storage to operate, Western Digital Corporation (NASDAQ:WDC)’s shares are up by a modest 24% year to date. This is because while AI data centers have been building out slowly, demand from non-AI cloud and data center industries has remained muted in a tight economy constrained by limited spending and tight budgets. This drove a massive dip in Western Digital Corporation (NASDAQ:WDC)’s shares after its Q2 earnings. However, the Q3 report saw shares jump by 9% after catalysts from AI cloud data centers drove demand for the firm’s Flash and HDD products.
Western Digital Corporation (NASDAQ:WDC)’s management shared details about its AI exposure during the Q1 2025 earnings call. Here is what they said:
” Yeah, we feel really good about where the portfolio is. We’ve talked I think for a quarter or so now about this, our compute focused PCIe Gen 5 product that’s what was qualified by NVIDIA in their reference architecture that allows us to go to all the folks that are building those products for customers and be in a good position to have those conversations as we drive that product more broadly in the market. We also have a very deep engagement with one, well, a couple of large hyperscalers on that product as well. So to your point, we’ve got more confidence in the growth of the portfolio. It’s a very good demand environment. That’s I don’t think that’s new news for enterprise SSDs and it’s nice to have the portfolio where we can play into that.
And as you said we expect our mix of bits when we add it all up the end of fiscal year last quarter when we were having this conversation we thought it would be around 10%. Now we’re more in the 15% to 20% range. So demand keeps going up, the number of qualifications we’ve doubled in the last quarter. So the traction with the portfolio is good. It all aligns well with the AI Data Cycle we put out there both for the compute focused SSDs and then the high capacity data lake focused SSDs 30 and 60 terabytes. And again the traditional products that we were selling to the hyperscalers are also doing well also. So just I think that portfolio is something we’ve been working on for quite some time. As you know we got qualified before the downturn. We came out of it with a better portfolio.”
WDC is a stock investing heavily in growth according to Goldman Sachs. While we acknowledge the potential of WDC as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WDC but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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