AI Trade in Trouble? Western Digital CEO Explains Why He's Not Worried

What happened

Western Digital stock has doubled in 2026 as AI storage demand fuels growth. CEO Irving Tan said AI-related storage demand remains strong and should grow at about a 25% compound annual rate over five years, as the company beat quarterly expectations and raised its dividend 17%.

Confirmed

Global impact / market context

Western Digital sells storage hardware that data centers need to run AI work. If demand grows near 25% a year, revenue should rise and support profit, but higher capital spending and input costs could absorb some of that gain and pressure cash available for dividends.

Analyst inference

Investors worry that massive AI infrastructure spending may not earn enough return, especially at newer cloud providers called neoclouds. Those concerns and interest rates have made AI-linked stocks volatile, yet Western Digital says major hyperscale cloud customers, which are large established data center operators, support its business.

Analyst inference

What to watch

1. Watch whether Western Digital's fiscal second-quarter adjusted earnings per share reach as much as $6, the guidance it gave, and whether the 25% compound annual storage demand growth actually appears in reported revenue. Confirmed
2. Track company updates on capital spending and input costs, since management flagged both as investor concerns; rising spending would reduce cash available even if storage demand stays strong and revenue grows. Proposed
3. Monitor results from neoclouds and hyperscale cloud customers, because weaker orders or delayed data center projects would cut storage demand and could slow Western Digital's revenue growth and profit per sale. Analyst inference

Evidence

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