We just published the list of 10 Best Memory Stocks to Buy According to Billionaires and Western Digital Corp (NASDAQ:WDC) ranked 6th on the list.
In the first half of the year, memory was the hottest AI trade. Hyperscalers poured billions of dollars into data centers where high-bandwidth memory was one of the tightest bottlenecks in the supply chain. Most of the memory stocks rallied as a result, though the returns have been muted in the second half of the year so far, accompanied by high volatility.
Some on Wall Street say memory makers are sold out till 2030. Others say only till 2028. While the exact status of the industry can be debated, there's little doubt about the willingness of stock market investors to pay a higher multiple for memory stocks. This debate has been done to death, and memory makers continue to trade at extremely low forward earnings multiples, implying that the earnings cycle has peaked.
So what's the truth? Is it the end of the boom? Or is the structural shift in the memory business finally here? If you would rather avoid the high-risk nature of AI stocks, particularly memory and storage, you could look at companies that are doing the exact opposite, i.e., bringing in healthy cash flows and carrying low debt in our list of 10 Stocks With Low Debt and Strong Free Cash Flow .
But if you want exposure to the best memory stocks, read on. In my quest for the answer to the above questions, I reached out to a person who regularly interviews industry experts to find out answers to questions like these. I asked a famous Substack and X analyst, P Equity Research , whether 'this time was really different'. Here's what he had to say:
"There are essentially 3 important conditions these memory makers set in their LTAs: volume, price, duration. They are all negotiating LTAs to fix volume, a price floor, and duration of contract to get rid of past boom and bust cycles in the industry. As long as the Capex cycle holds strong, yes, they are sold out for 2028 and will be potentially beyond that."
So how are billionaire investors treating memory stocks with so much negativity surrounding the business? That's exactly what I wanted to find out with my article 10 Best Memory Stocks to Buy According to Billionaires.
Source: Seagate
To come up with my article 10 Best Memory Stocks to Buy According to Billionaires, I first looked up multiple memory ETFs to list all memory stocks. In this list, I include stocks that derive at least 30% of their revenue from memory-related products and services. My list also bundles memory and storage stocks together. That is because some storage types also utilize memory chips and, more importantly, they face the exact same cyclicality that memory stocks are notorious for. They are listed in ascending order of the number of billionaires holding them in their portfolios.
Western Digital Corporation (NASDAQ:WDC) plays an important role in AI infrastructure by making the hard disk drives used to store data. In the first quarter of fiscal 2027, the company reported a 55% jump in quarterly revenue to $4.4 billion. Cloud customers accounted for 88% of sales. Gross margin reached 58.1%, and free cash flow totaled $1.4 billion. Management also pointed to growing demand from enterprises, AI labs, and neoclouds, beyond the hyperscalers. However, the stock still fell 4% in premarket trading. The concern came down to one comment about spending.
Guidance Keeps Moving Higher
The outlook is getting stronger. Western Digital expects revenue of around $5.1 billion in the current quarter, with gross margin of 60% to 61% and earnings per share of $5.80. For comparison, its guidance last quarter was $4.1 billion in revenue, a 55% to 56% gross margin, and $4 in EPS. Higher pricing is one reason for the stronger outlook. The average price per terabyte increased 28% year-over-year, compared with growth in the high teens in the previous quarter. Meanwhile, its new 40-terabyte drives are gaining traction. They are expected to make up close to 30% of nearline shipments by the second quarter, growing to 50% by the third.
Investors are focused on capital spending, which is expected to stay slightly above the usual 4% to 6% of revenue over the next two years. But not everyone sees this as a major concern. Three analysts, each carrying an Overweight rating, think the market is overreacting. Morgan Stanley's Erik Woodring pointed out that management had already signaled this is September and raised his price target to $668. J.P. Morgan's analyst Joseph Cardoso increased his target to $650, while Wells Fargo's analyst Joe Quatrochi kept his price target unchanged at $450 and recommended buying the dip. Meanwhile, management plans to lower cost per terabyte by around 10% to help offset higher input costs. The spending increase was already known, while demand is already showing up in the numbers. If that demand continues, the selloff over planned spending could eventually prove to be a buying opportunity.
As per our database, the number of hedge funds holding Western Digital rose sharply from 83 at the end of Q1 2026 to 98 at the end of Q2 2026. This suggests that institutional investors are confident in the company's ability to deliver.
If you want AI data center names billionaires are backing most heavily, explore our list of 10 Cheapest AI Data Center Stocks to Buy According to Billionaires .
While we acknowledge the risk and potential of WDC as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than WDC that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock .
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