Computer Hardware Company Up Over 70% In 2026
2026 hasn’t been kind to investors so far.
Fighting in the Middle East continues, which is hurting stocks.
The Dow Jones Industrial Average is down over 5% in 2026, and hit a new low for 2026 last week.
But some stocks are ignoring the fighting and are having a great year.
Western Digital (ticker: WDC) has been crushing 2026 so far.
Its stock price is up more than 70% in 2026, and is up over 700% in the past year!
What’s the reason for the meteoric rise in Western Digital’s stock price?
And can it continue?
Western Digital is a computer hardware company.
In particular, Western Digital manufactures hard disk drives, which were all the rage when I was a kid back in the ‘90s.
But cloud storage really slowed growth for hard disk drive manufacturers in the last 15 years.
People could just easily store their files on the internet and not deal with extra plugs and equipment.
However, hard disk drives are in high demand again.
And it’s a lot bigger than the ‘90s.
Artificial Intelligence (AI) is the next big thing, and AI needs physical data centers to work.
These data centers need the hard disk drives sold by Western Digital.
Revenue over the past 12 months is up 28% compared to the 12 months prior.
Last quarter, Western Digital made over $1.8 billion in profit, which was more than 3x higher than the same quarter in 2024.
All of these numbers look great, but is it really worth a 700% increase in the stock price?
You’d think Western Digital’s valuation ratios would be high, but you’d be wrong.
Western Digital’s current price-to-earnings (P/E) ratio is 30x, which is right around its industry average.
However, the PEG ratio is better for measuring fast-growing companies.
The PEG ratio is calculated by dividing the P/E ratio by the expected long-term growth rate in earnings, usually over the next 5 years.
Analysts expect Western Digital to grow its earnings by 50% each year over the next five years.
It’s a very high growth rate, but remember Western Digital just grew its earnings by over 300% last quarter compared to the prior year!
Generally, PEG ratios below 1.0x are considered cheap, so Western Digital’s 0.6x PEG ratio should raise some eyebrows.
Western Digital definitely needs to grow earnings to justify the price increase.
But management is extremely optimistic about its future growth.
In the next 3-5 years, management expects earnings per share to rise to over $20.
Western Digital’s EPS was less than $5 last year, so management doesn’t think a 50% growth rate is too much of a stretch.
AI is going to be huge.
And for AI to get there, Western Digital is going to make a lot of money.
What stocks are you buying because of AI?
Coach Parker
Category: Stocks
