This Glorious Growth Stock Has Surged 170% in 2026. It Is Set to Skyrocket Higher

Heavy spending on artificial intelligence (AI) infrastructure has supercharged Western Digital (WDC +3.50%) stock in 2026, with shares of the data storage company jumping by 170% this year, as of this writing.

The good news for investors is that it isn’t too late to buy this high-flying AI stock. The incredible demand for storage in AI data centers has led to a severe shortage of hard disk drives (HDDs), creating a massive tailwind for Western Digital that’s not going to go away any time soon. The company’s latest quarterly results make it clear that it is poised to deliver stronger growth going forward, which will translate into more upside.

Let’s look at the reasons why shares of Western Digital can continue soaring following stunning gains this year.

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Western Digital’s red-hot earnings growth is here to stay

Western Digital released its fiscal 2026 third-quarter results (for the three months ended April 3) on April 30. The company’s revenue shot up 45% year over year to $3.34 billion, while adjusted earnings per share increased 97% to $2.72. The numbers were well ahead of Wall Street’s expectations, fueled by heavy demand from AI data centers and favorable pricing.

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NASDAQ: WDC

Western Digital

Today’s Change

(3.50%) $16.24

Current Price

$480.15

Key Data Points

Market Cap

$165B

Day’s Range

$469.31 - $483.47

52wk Range

$46.40 - $483.87

Volume

247K

Avg Vol

8.7M

Gross Margin

45.39%

Dividend Yield

0.09%

It is worth noting that 89% of the company’s revenue came from the cloud segment, which serves hyperscalers and cloud service providers. This segment is playing a central role in boosting Western Digital’s profitability. That’s because the higher-capacity drives Western Digital sells for AI data centers enjoy fatter margins.

Moreover, the shortage of hard drives means that Western Digital is in a position of strength to negotiate higher prices from customers. The company reports that it enjoyed a 9% year-over-year increase in prices last quarter. Importantly, the favorable pricing trends are poised to continue for the rest of the year, supported by the new long-term supply agreements it has signed with customers at higher prices.

Western Digital management noted on the latest earnings call that customers are placing orders a year in advance, suggesting the strong demand for its storage products isn’t slowing. Western Digital CEO Irving Tan believes that the shift toward AI inference applications is driving stronger storage demand:

As AI workloads extend from training to large-scale inferencing, data generation is at an inflection point. This year, inference is expected to account for roughly two-thirds of all AI compute. This larger focus on inference increases the amount of data generated, which in turn increases the need for data storage.

Western Digital estimates that the AI and cloud storage market is on track to grow at a compound annual growth rate (CAGR) of more than 25% through 2030. This explains why Western Digital customers are placing orders for 2028 to secure enough storage for AI data centers. As a result, the solid increase in HDD prices seems sustainable, especially given that the shortage could extend into 2030.

How much more upside can investors expect?

Western Digital noted in March that its earnings could jump past $20.00 per share in the next three to five years. However, that number could arrive way sooner. The company has clocked $6.65 in earnings per share in the first nine months of the current fiscal year, and it expects $3.25 per share in the current quarter.

So, it is on track to end fiscal 2026 with earnings per share of $9.90. Analysts are expecting Western Digital’s earnings to cross the $25.00 per share mark over the next couple of years.

WDC EPS Estimates for Current Fiscal Year data by YCharts

Of course, the company could do better than that as the favorable conditions driving its growth are likely to persist beyond the next couple of years. But even if Western Digital’s earnings jump to $25.05 per share in fiscal 2028 (as per the above chart) and it trades at 34 times earnings at that time (in line with the Nasdaq-100 index’s earnings multiple), its stock price could reach $851. That’s a potential upside of 81%, suggesting investors can still buy this growth stock in anticipation of further gains.

What’s more, Western Digital trades at an attractive 29 times earnings right now, giving investors an attractive entry point to capitalize on the massive investments in AI data centers.