Western Digital's (WDC, Financial) stock shot up 10% after posting impressive Q1 fiscal 2025 results and laying out plans for its highly anticipated spin-off. The data storage giant saw revenue hit $4.1 billion, surging 49% year-over-year, fueled by a staggering 153% spike in cloud sales. With the "soft-spin" phase already in motion, Western Digital is gearing up to split its HDD and NAND divisions into separate entities by early 2025. CEO David Goeckeler remains confident, pointing to the strong performance of UltraSMR HDDs and a growing wave of AI-driven enterprise SSD demand as signs the company is ready to capitalize on this transformation.
Analysts are bullish on the split as a game-changer for shareholder value. Morgan Stanley reiterated its "Overweight" rating, suggesting Western Digital's stock still has room to run, with a $100 target, reflecting optimism about earnings potential from both business units. The company's December quarter guidance has also outpaced expectations, which should ease concerns over any near-term headwinds in the flash market. Mizuho chimed in, maintaining its "Outperform" rating with a $90 target, noting that Western Digital remains a bargain compared to peers like Seagate (STX, Financial)
With AI adoption reshaping data storage needs, Western Digital's diverse lineup is well-positioned to seize new growth opportunities. The cloud business now accounts for over half of its total revenue, while the consumer segment remains a laggard, down 7% from last year. Despite the softer consumer market, the company is eyeing a rebound in 2025, driven by booming enterprise demand and strategic plays in advanced storage technology.
