Western Digital's Memory Drive Powers AMD's EPYC Processors

Western Digital Corporation (NASDAQ:WDC) recently announced collaboration with Advanced Micro Devices, Inc. (NASDAQ:AMD) in a bid to offer high-performance cost-effective memory solution aimed at real-time analytics, in-memory databases and time-sensitive workloads.

AMD EPYC processors will be integrated with Western Digital’s Ultrastar DC ME200 Memory Extension Drive. This combination is anticipated to deliver robust storage solutions to accelerate enterprise applications on cloud platforms.

Western Digital unveiled Ultrastar DC ME200 Memory Extension Drive last year in October to enhance overall drive capacity, reliability and performance. The drive is compatible with PCIe-device, and provides high computing experience and caters to the need for greater workloads and architectures.

The expanded capacity of the Ultrastar memory drive with AMD EPYC processors will improve demand for the HDDs among large enterprises, small and medium size businesses (SMBs) and creative professionals. Together with Western Digital’s low-latency and high-performance NVMe platforms, the collaboration is well poised to deliver scalable and durable cloud storage solutions.

Further, the companies aspire to provide cloud object storage solution with petabyte capacity to accelerate high performance computing (HPC) and machine learning (ML) processes.

Notably, SAP, Microsoft (NASDAQ:MSFT) , Oracle (NYSE:ORCL) and IBM (NYSE:IBM) are few companies that utilize the Ultrastar memory drive for their in-memory database engines. These contracts are helping Western Digital rapidly penetrate the memory market.

According to Western Digital, “AMD EPYC processor-based servers, combined with Ultrastar memory drives, can greatly increase the amount of overall memory per server to provide more cost-effective data center infrastructure for in-memory applications.”

We believe new initiatives to enhance its data center storage portfolio are likely to aid the company in reviving fortunes and improving competitive position against other storage players in the market. Notably, shares of Western Digital have returned 33.4% in the year to date period, outperforming the industry’s rally of 20.4%.

Analyzing Market Opportunities

IDC forecasts that by 2025, the global datasphere will grow to 175 zettabytes (that is a trillion gigabytes), from 33 zettabytes in 2018. This exponential growth of data bodes well for Western Digital’s enterprise storage solutions due to increasing demand for faster processing of data.

Per ResearchAndMarkets data, the global data center storage market is projected to increase at a CAGR of 11.8% from 2018 through 2022. Per MarketsandMarkets report, the non-volatile memory market is projected to reach approximately $82 billion by 2022 at a CAGR of 9.5%.

The aforementioned reports reflect robust demand for cloud storage systems in data centers, which in turn strengthen the prospects of the to-be-developed collaborative solution.

To Conclude

The new products are aimed at further innovation in memory technologies, which in turn will strengthen the company’s product portfolio. We believe that the momentum from the launch of the Western Digital product suite will help the company to emerge as a major player in the rapidly growing storage market, in turn lending greater stability to revenue stream. Additionally, this will help Western Digital gain new customers, going forward.

Lastly, we believe that new enhancements to its data center storage portfolio and other product rollouts are likely to aid the company in reinforcing its market position against the likes of Seagate (NASDAQ:STX) .

Zacks Rank

Currently, Western Digital carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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