Western Digital Stock Dip Signals Buying Opportunity Despite Inventory Concerns

Wall Street drove shares of Western Digital (WDC) lower on fears that higher inventories are a potential problem. Nothing could be further from the truth! Here’s why today’s dip is a buying opportunity…

Western Digital Corporation (WDC) was the next AI-related company to post better-than-expected quarterly results. But in what has been par for the course this week, Wall Street didn’t celebrate; rather, it hit the stock on bogus fears.

First, the results…

Western Digital’s hard disk drives (HDDs) are a crucial component of AI data centers, as they provide the long-term storage necessary to keep data secure. Hyperscalers are constantly knocking down Western Digital’s door for its HDDs—and this relentless demand has led to soaring prices, with the average price for a terabyte of storage jumping 28% in the latest quarter.

Thanks to the price jump, Western Digital’s revenue increased 55.3% year-over-year to $4.38 billion, and earnings rose 54.8% year-over-year to $1.78 billion, or $4.63 per share, in its first quarter of fiscal year 2027. Adjusted earnings surged 161% year-over-year to $4.64 per share, topping analysts’ estimates of $4.08 per share.

What’s great is that Western Digital’s operating earnings should remain robust in future quarters, too. The company reported that its operating margins expanded by 58.1%, up from 49.1% in the past year.

Now, Wall Street’s overreaction…

One analyst reported that Western Digital’s inventories rose to $1.78 billion, compared to $1.51 billion in the fourth quarter of fiscal year 2026. The analyst insinuated that Western Digital’s rising inventories were a potential problem. The claim is that increased inventories signal weak demand.

The analyst clearly doesn’t know what he’s talking about.

When you consider Western Digital’s explosive sales growth, the company’s inventories are actually tighter as a percent of sales than they were a year ago. Also notable, Western Digital’s inventory levels remain below its five-year average.

In other words, Western Digital doesn’t have an excessive inventory.

So, the pullback in WDC is a classic overreaction to one analyst’s opinion. The truth is that Western Digital has achieved nine straight quarters of accelerating revenue growth—and its increased guidance reflects the company’s expectations for revenue and earnings to continue to grow.

WDC is now a screaming near-term buy. My stock grading system rates Western Digital as an A.

Louis Navellier and his family own Western Digital (WDC).