SummaryWestern Digital is no longer the company most investors remember. Since the Sandisk flash business was spun off in February 2025, WDC is a pure hard-disk-drive maker, one half of a global duopoly with Seagate, and it has spent the last six quarters selling every nearline drive it can build to hyperscalers that are racing to store what their AI systems produce. Revenue in the quarter ended 2 October 2026 was $4.38B, up 55% year on year, at a GAAP operating margin of 46.7%. The company says it is sold out for calendar 2026, has long-term agreements that reach into 2027 and 2028, and guided the December quarter to $5.1B of revenue at a 60 to 61% gross margin.The stock has already discounted a great deal of that. It rose from about $45 in January 2025 to a closing high of $746 on 2026-06-18, and has since fallen 51% to $366.11, dropping after each of its last three earnings reports despite beating estimates every time. At $366 the market capitalisation is $137B on a net-cash balance sheet, which is 23.9× trailing operating profit, 17.9× consensus earnings for the fiscal year ending June 2027 and 10.2× the fiscal 2028 consensus.Our conclusion, built in the Stoxa workbench on poin…

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