BUZZ-Preview: Western Digital shares fall ahead of earnings report as AI sector plunges

October 22 - ** Western Digital (WDC.O) shares fell 7.4% on Thursday to $350.59 as the company is set to report its quarterly earnings after market close. Previously, with market enthusiasm for artificial intelligence stocks fading, there was a broad sell-off in technology shares.

** The S&P 500 technology sector .SPLRCT dropped 3% on Thursday, sharply reversing Wednesday’s gains—earlier, earnings from companies such as SpaceX SPCX.O and Super Micro SMCI.O triggered an AI-driven relief rally (link).

** According to the London Stock Exchange Group (LSEG), data storage device manufacturer Western Digital (WDC) is expected to report a 47% year-on-year increase in first fiscal quarter revenue to $4.14 billion, with adjusted earnings per share of $4.09, compared to $1.78 in the same period last year.

** In August, WDC predicted (link) that quarterly revenue would be slightly above expectations, but as share prices had previously surged, the company’s outlook did not meet the market’s high expectations, leading to a drop in the share price.

** Despite the pullback, WDC’s shares are still up about 104% for the year, significantly outperforming the S&P Technology Index (SPLRCT) gain of 21% and the Nasdaq .IXIC index’s 12% rise.

** The stock’s recent price-to-earnings ratio is 15 times, lower than its five-year average of 17 times – LSEG.

** Out of 27 analysts, 20 give the stock a “strong buy” or “buy” rating, and 7 rate it a “hold”; the median target price of $625 implies an upside of about 78% from current levels.

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