Western Digital Corp. (NASDAQ:WDC) shares are up 3.3% in early Thursday trade after Barclays and Deutsche Bank analysts upgraded the computer hardware and storage company to buy.
In a note discussing the 2nd wave of AI, Barclays analysts believe that 2024 and 2025 will see the return of flash and nearline HDD.
“We think HDDs are a good neighborhood to play in over the next 2-years and roll out our CY25 forecast with units up 5% and revenue up 19%. We acknowledge lower quality balance sheets but think the industry is going through a real technology transition with HAMR that greatly accelerates cost downs coupled with a refresh in traditional serve,” the analysts said.
“We think WDC will have product in CY25 and ultimately the better industry dynamic will be a positive for both. We are also raising our Flash estimates for CY24 and moving ahead of the Street. We think WDC deserves some more credit and the valuation gap with STX should close.”
Similarly, Deutsche Bank analysts raised the rating to Buy from Hold as they see tailwinds “from both fundamentals and strategic action.”
“With the stock trading below the low end of the range, we believe the risk-reward is attractive,” the analysts said.