Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTWill Ebiefung, The Motley FoolMon, June 8, 2026 at 6:50 PM GMT+2 4 min readWith shares up by an eye-popping 981% over the past 12 months, Western Digital (NASDAQ: WDC) is one of Wall Street's latest darlings in the generative artificial intelligence (AI) megatrend. The company is benefiting from the surging demand for its high-capacity computer memory and storage hardware needed to help clients train and operate large language models (LLMs).The factors that led to Western Digital's explosive rally are still in play. But it's hard to not get nervous when looking at a stock chart that has gone practically vertical. Let's explore the pros and cons of the company to decide if it is still a good buy or if investors should take profits and run.Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »What is Western Digital? Since its founding in 1970, California-based Western Digital has grown to become a major supplier of consumer and enterprise data storage solutions like hard disk drives (HDDs) and solid state drives (SSDs). But while these products are useful, this part of the tech sector has historically been much less glamorous and attractive to investors. In fact, Western Digital stock generated practically no sustained growth between August 1997 (at the height of the PC boom) and April 2025. That's almost three decades of essentially dead money at a time when software and internet companies like Apple, Amazon, and Microsoft were delivering life-changing returns to their shareholders.The stock's fortunes abruptly changed in late 2025 when investors started realizing that memory and storage were becoming the primary bottlenecks in the race to create bigger and better AI models. While companies like Nvidia dominated the headlines with their processing chips, the constant improvements in their hardware also created a need for storage solutions powerful enough to keep up. Data center clients are racing to purchase this hardware practically as fast as it can be produced, leading to memory hardware shortages and rapidly rising prices. Western Digital is a major beneficiary of this trend. The rally is rooted in fundamentals Western Digital's recent rally isn't driven by hype alone. The company's fiscal third-quarter earnings show impressive operational momentum. Revenue jumped 45% year over year to $3.34 billion, driven by data center demand for HDDs and other types of data storage infrastructure. Perhaps most importantly, the company's gross margin is also rising, jumping from 39.8% to 50.2% over the last 12 months.Terms and Privacy PolicyPrivacy & Cookie SettingsMore Info