Will Western Digital's HAMR Push Accelerate Future Growth?

Western Digital Corporation WDC is advancing its Heat-Assisted Magnetic Recording (HAMR) strategy to support rising demand for high-capacity storage in the AI-driven data economy. As artificial intelligence (AI) adoption and cloud computing continue to accelerate data creation, the company believes the need for persistent, scalable and cost-efficient storage will continue to increase.

On the last earnings call, management highlighted that AI training, inferencing, the emergence of agentic AI, synthetic data generation and physical AI applications, including robotics and autonomous vehicles, are expected to drive long-term storage demand CAGR of more than 25%. To address these evolving requirements, the company is expanding its HDD technology portfolio with higher-capacity drives, improved performance and lower total cost of ownership.

Western Digital continues to collaborate with hyperscale customers while advancing areal density improvements and accelerating its ePMR and HAMR roadmaps. In the third quarter of fiscal 2026, the company shipped 222 exabytes, up 34% year over year, including 4.1 million next-generation ePMR drives totaling 118 exabytes with capacities of up to 32TB. It is also expanding UltraSMR adoption, leveraging its reliability, scalability and total cost of ownership advantages for data center customers.

To strengthen its HAMR capabilities, the company acquired intellectual property and talent to enhance its in-house laser development expertise and introduced UltraSMR-enabled JBOD platforms with software ecosystem partners to broaden adoption through higher storage density and hyperscale-class performance. Firm purchase orders from its top seven customers extend through 2026, while multi-year commercial agreements with three of its top five customers continue into 2027 and 2028.

Western Digital has outlined a customer-focused storage roadmap centered on scalable capacity, improved performance, better power efficiency and faster deployment while maintaining HDD economics. Its 40TB UltraSMR ePMR HDD is targeted for volume production in the second half of fiscal 2026, while HAMR drives are expected to ramp in 2027. The roadmap extends ePMR to 60TB and scales HAMR technology toward 100TB by 2029. The company is also advancing High Bandwidth Drive Technology, Dual Pivot Technology and power-optimized drives, while expanding UltraSMR adoption and its Platforms business to support AI-scale storage deployments.

Taking a Look at WDC’s Competitors

Seagate Technology Holdings plc STX is strengthening its leadership in HAMR technology to address growing AI-driven demand for high-capacity, cost-efficient storage. Its second-generation Mozaic 4+ platform delivers up to 44TB per drive, more than 30% higher capacity than earlier versions, and is expected to dominate HAMR exabyte shipments by the end of 2026. The company has already shipped millions of HAMR drives and expects Mozaic 5, offering up to 50TB capacity, to enter qualification in late 2027. Seagate believes its HAMR roadmap, focused on increasing areal density, will support long-term exabyte growth while improving cost and power efficiency per terabyte.

NetApp, Inc. NTAP is benefiting from rising enterprise demand for modern all-flash storage and hybrid cloud data management as customers scale AI workloads. Fourth-quarter fiscal 2026 results showed continued growth in all-flash, Public Cloud services and Keystone, supported by deeper hyperscaler partnerships and a larger services backlog. For fiscal 2027, management expects revenue growth to accelerate, and plans to continue returning capital to shareholders, including returning up to all free cash flow, while also investing in AI-focused product refreshes. For fiscal 2027, NetApp projects net revenues in the range of $7.325 billion to $7.575 billion.

WDC Price Performance, Valuation and Estimates

In the past month, shares of WDC have jumped 12.3% compared with the Zacks Computer-Storage Devices industry’s growth of 5.2%.

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In terms of forward price/earnings, WDC shares are trading at 29.54X, higher than the industry’s 13.18X.

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The Zacks Consensus Estimate for WDC’s earnings for fiscal 2026 has been revised north 0.4% to $10.06 over the past 60 days, while the same for fiscal 2027 has gone up 8.44% to $18.64.

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Currently, Western Digital has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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