Western Digital (NASDAQ:WDC) stock soared 10% after reporting impressive results for the first quarter of fiscal 2025 and laying out plans for its highly anticipated spinoff. The data storage giant saw revenue reach $4.1 billion, up 49% year-over-year, fueled by a staggering 153% rise in cloud sales. With the soft-spin phase already underway, Western Digital is preparing to split its HDD and NAND divisions into separate entities by early 2025. CEO David Goeckeler remains confident, highlighting the good performance of UltraSMR hard drives and a growing wave of demand for AI-driven enterprise SSDs is a sign that the company is ready to capitalize on this transformation.
Analysts are optimistic about the split because it could be a game-changer in terms of shareholder value. Morgan Stanley reiterated its “overweight” rating, suggesting Western Digital stock still has room to rise, with a target of $100, reflecting optimism about the earnings potential of both business units. The company’s guidance for the December quarter also beat expectations, which should ease concerns about possible near-term headwinds in the flash market. Mizuho weighed in, maintaining its “Outperform” rating with a $90 target, noting that Western Digital remains a bargain compared to peers like Seagate (NASDAQ:STX)
As the adoption of AI reshapes data storage needs, Western Digital’s diverse portfolio is well positioned to capture new growth opportunities. The cloud business now accounts for more than half of its total revenue, while the consumer segment continues to lag behind, down 7% from last year. Despite the slowdown in the consumer market, the company sees a rebound in 2025, driven by growing enterprise demand and strategic plays in advanced storage technologies.
This article first appeared on GuruFocus.