Western Digital (WDC) has been the top-performing S&P 500 stock this year, driven by AI tailwinds and corporate restructuring. Morgan Stanley predicts WDC will continue to rise in 2026, with an “Overweight” rating and $228 price target. The stock is trading at 6x its price in April and is attractive for the coming year.

Despite its strong performance, WDC remains appealing due to its recent inclusion in the Nasdaq-100 Index, replacing Lululemon. The company’s leaner business model and index inclusion have triggered forced buying from passive funds. Western Digital has reinstated its dividend and announced a $2 billion stock buyback, making it an even more attractive long-term investment.

Current quarter estimates show that WDC is expected to earn $1.80 a share in Q2, up over 16% from last year. Morgan Stanley predicts a 26% increase in the stock next year due to AI tailwinds driving demand for data storage. With a valuation of less than 25x forward earnings, Western Digital is seen as a cost-effective storage solution compared to other AI beneficiaries like Nvidia.

With a 100-day RSI at 62, Western Digital’s bullish momentum shows no signs of slowing down. Analysts recommend holding onto WDC shares for the next 12 months, indicating continued growth potential for the data storage giant.

Read more at Yahoo Finance: The Top-Performing S&P 500 Stock in 2025 Was This 1 Unexpected Company