President Trump's Portfolio Added a Stock That's Up More Than 2,100% Since 2023 -- and It's Sliding Today.

A recent federal ethics disclosure revealed that President Donald Trump's investment accounts bought shares of Western Digital (NASDAQ: WDC) earlier this year. It's one of the market's biggest AI winners, up more than 2,100% since the start of 2023. And in a bit of awkward timing, the stock is falling today.

Before reading too much into it, one important caveat. The accounts are reportedly managed by third-party institutions, so the president himself wasn't responsible for the decision to buy or sell any particular security. The disclosure, released by the U.S. Office of Government Ethics, showed thousands of trades across those accounts in the first quarter. The Western Digital purchase was just one of many.

Still, the trade is a useful excuse to look at a stock that has quietly become one of the best performers in the entire market.

Image source: Getty Images.

An improbable run

The purchase, disclosed in a range of $45,000 to $150,000, went into a company most people know for hard drives. And that ordinary-sounding business is exactly what's driving the stock.

The AI boom has turned out to need somewhere to put all the data it generates. Much of that data lands on the high-capacity hard disk drives Western Digital sells to cloud and data center customers. That demand has transformed the company's results. In its fiscal third quarter (the period ended April 3, 2026), revenue rose 45% year over year to $3.34 billion, and gross margin topped 50%, up from about 40% a year earlier. Non-GAAP (adjusted) earnings per share nearly doubled to $2.72.

"Virtually every AI workload, from training, inference, agentic AI to physical AI, creates data that is stored persistently and cost-efficiently on HDDs," said Western Digital CEO Irving Tan in the company's fiscal third-quarter earnings release.

Management expects the momentum to continue. It guided for fiscal fourth-quarter revenue to rise 36% to 44% year over year, with adjusted gross margin climbing further to 51% to 52%. That would extend an already remarkable run and explain why the market has repriced the stock so dramatically. A company earning better than 50-cent margins on the dollar looks very different from the low-margin drive maker investors used to shrug at.

It's also worth noting what Western Digital is today. The company spun off its flash-memory business, Sandisk, into a separate company in early 2025, leaving Western Digital focused squarely on hard disk drives. That focus has turned into an advantage: the cheap, high-capacity drives it makes are exactly what hyperscalers reach for to store the flood of data that AI systems produce and consume.

Why it's down today

So why is a stock this strong falling today? It has little to do with Western Digital itself.

Samsung announced guidance for record quarterly operating profit, driven by the same AI-fueled memory demand lifting the whole sector. Yet instead of cheering, investors sold. One worry may be that results this strong might mark the top of a notoriously volatile cycle. Memory and storage stocks slid across the board, and Western Digital, up more than 200% this year as of this writing, dropped alongside them.

That's the risk hiding inside the stock's 2,100% run-up. Storage and memory have always been cyclical, with booming demand eventually leading to oversupply and ultimately resulting in lower prices (and profits).

Does the AI storage boom justify the price?

After a move this large, a stock's valuation deserves a hard look. Even after today's slide, Western Digital trades at more than 30 times forward earnings. That's a rich multiple for a business the market treated as a sleepy hardware supplier not long ago.

But a valuation like this only makes sense if the current demand surge proves durable. If AI-driven storage demand keeps growing and pricing holds, today's earnings can keep climbing and grow into the valuation over time. On the other hand, if the cycle turns, shares could crater.

So, is Western Digital a buy after its enormous run?

I'd be cautious here. The business is booming, and the AI storage demand behind it is no mirage. But buying a cyclical stock just weeks after it set record highs, at more than 30 times earnings, after a 2,100% run, leaves little room for error if the cycle cools. Today's sell-off, triggered by good news rather than bad, is a reminder of how quickly sentiment can shift in this corner of the market.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Western Digital. The Motley Fool has a disclosure policy.