Western Digital (WDC) Surges 12.5% to $548 - Kioxia Merger Talks, $900 Analyst Target

TradingKey - Western Digital (NASDAQ: WDC) closed the trading day at $548.39 on Tuesday, July 22. The company added 12.51% on 7.37 million shares, as the sector bounced back on memory stocks and reports that Western Digital has restarted merger negotiations with Kioxia Holdings Corporation of Japan. Since its low on July 17 at $477.22, WDC stock has advanced, dropping 36% from its high on June 18 of $746.23, still remains up 218% YTD. 

Analysts at Cantor Fitzgerald currently maintain a $900 price target, which is the highest in the Street. The next major earnings announcement will come during the reporting period for Q4 FY2026 on August 5, which could provide additional price action around $555.47.

Why Is WDC Stock Up Today?

The WDC stock rallied as a result of three key factors:

Memory stocks were bullish following research from Morgan Stanley and Bank of America on Micron that helped to improve sentiment across the storage and memory names, including Western Digital.

Reports that Western Digital re-initiated merger talks with Kioxia boosted sentiment regarding a potential deal. Western Digital's enterprise hard disk drive (HDD) business would be combined with Kioxia Holdings Corporation of Japan's NAND flash production. The combination would offer a storage company that could be able to offer more product diversity to challenge Samsung and SK Hynix.

News reports indicate that the United States will keep its pressure on Chinese memory chipmakers. A supply outlook that is favorable for Western Digital means that any long-term agreements with other production sources are increasingly important for the company.

Strong Fundamentals Support the Rally

In late 2025, Western Digital spun off its consumer storage business, SanDisk, to become a focused HDD and enterprise storage company. The name is poised to benefit from the demand for storage, as more artificial intelligence-related infrastructure is deployed globally. The enterprise segment of Western Digital produces HDDs, which offer the most affordable storage capacity for data center hyperscalers. Given that the massive datasets that are generated by artificial intelligence applications, HDDs are the primary method for storing this data.

Western Digital beat earnings for Q3 FY2026 with an earnings per share (EPS) of $2.72 per share, while the consensus forecast stood at $2.39 per share. According to management, 2026 HDD production is sold out, and the company has signed long-term contracts with customers for 2027 and 2028. Therefore, the company's revenues are already secured.

Wall Street is forecasting Q4 FY2026 EPS of $3.32 on $3.7 billion in revenue. If this were to come true, that would be an earnings gain of nearly 100% and revenue growth of 42% from a year earlier. Given the earnings improvement, this would only help Western Digital's prospects of reaching the $800 to $900 analyst price targets.

WDC Technical Overview: $548 Tests $555 Channel Resistance, RSI at 60

On the 4-hour time frame, WDC is up 12.51%, up from $485.98 in support and $519.17 at the 50 EMA at current prices at $548.39, now moving toward the upper end of the downtrending channel as well as the first major resistance at $555.47 where it intersects the 100 EMA.

Western Digital (NASDAQ: WDC) Price Chart - Source: Tradingview

This is the 60 RSI reading suggesting more buyers to be active. It is not yet oversold. A close over $555.47 would then test $594.43 followed by $635.81. A breakdown below $525.49, followed below $519.17 (the 50 EMA) would bring us back to $485.98.

• Daily move: +12.51% @ $548.39.
• Volume: 7.37M
• YTD: +218.33%
• Kioxia Mergers: Reports say merger talks have recommenced which could put WDC's hard drives and flash together
• HDD Availability: 2026 production sold out, contracts extend through 2028
• Q4 Earnings Day: Aug 5, 2026 Consensus: EPS $3.32 (+100% yoy); Revenue $3.7B (+42% yoy)
• Price Targets: Cantor $900 (highest on Street); Citi $800, $633.83 average (26 analysts, Buy)
• Technicals: Resistance $555.47 (100 EMA/upper channel). Next: $594, $635 if we move above that. Support $519 and then $485

Why Was WDC Up 12.5% Today?

Western Digital shares jumped 12.51 percent to $548.39 today because of three reasons: the general sector has rebounded following the release of buy reports from both Morgan Stanley and Bank of America on Micron, lifting the sentiment across WDC, Micron and SanDisk; WDC has been reported to have restarted discussions with Kioxia, a Japanese flash memory firm, on a potential merger after it had previously not been able to reach a deal; and a report by the Commerce secretary suggested that the US will stick with banning Chinese memory chips, a move which will help Western Digital given that their 2026 production capacity for hard disk drives has already been sold and that they have contracts through 2028.

What Is Kioxia?

Western Digital would merge its HDD (hard disk drive) and enterprise storage business with Kioxia's (日本キオクシア) business, an independent Japanese company from Toshiba, to build NAND flash memory production in SSDs, smartphones and data centers. A combined entity would allow Western Digital to compete more directly with Samsung and SK Hynix across both HDD and flash memory markets as well as build out its SSD business. Western Digital spun off its flash memory assets to SanDisk in late 2025. The proposed Kioxia deal would partially reverse that split and put Western Digital back in the flash business.

What To Look For In WDC's August 5 Earnings?

WDC is due to report Q4 FY2026 earnings on Aug 5. Consensus expects an EPS of $3.32 (+100% yoy vs $1.66 in Q4 FY2025) on $3.7B in revenue (+42% yoy). We expect the most significant margin surprise, given the Q3 margin showed clear pricing power, and any update on 2027 calendar visibility for HDDs (which we don't have yet). The $555.47 technical resistance level remains a key test for shares above that level, opening up $594 and $635. The market is currently trading in a range with a lower boundary of around $485 and an upper boundary of around $640. A move above $555.47 would be an important technical signal. Investors should also look for any update on the Kioxia merger process during the earnings call, as talks have been ongoing since earlier this week.

The Bottom Line

Western Digital stock price jumped 12.51 percent today, following a rebound in the sector, as reports emerged that talks to acquire Kioxia were back on, and the US Commerce secretary said he was not going back on a ban for memory chips imported from China. The business logic is compelling for Western Digital, an HDD-only vendor whose 2026 capacity is fully booked with contracts through 2028, with earnings set to grow 100 percent year-on-year. Analysts are pricing in upside, with Cantor estimating $900, Citi estimating $800, and the consensus at $633.83. Western Digital will see its next test at $555.47, with the next levels above and below being $594 and $485, respectively.