Not Nvidia. Not Micron. This Underappreciated AI Stock Could Be 2027's Biggest Winner.
This AI infrastructure stock is poised to grow faster than Nvidia and Micron Technology.
When artificial intelligence (AI) infrastructure took off, Nvidia and Micron Technology soared. Both companies produce mission-critical chips that handle AI training and inference workloads in data centers. However, Western Digital (WDC) could potentially surpass them as the biggest AI stock winner by 2027. The storage giant's shares have surged 103% in 2026, but have since dropped 49% from their June peak.
This represents a buying opportunity for savvy investors. In Q1 2027, Western Digital's revenue jumped 55% to $4.38 billion, while its non-GAAP gross margin surged to 58.1% from 43.9%. This led to a 161% year-over-year increase in non-GAAP EPS to $4.64. The company expects a 69% revenue jump in the current quarter, with non-GAAP gross margins reaching 60% to 61%, well above the prior period's 46.1%.
Western Digital's demand for data storage in AI data centers has expanded by 88%, with cloud storage projected to grow at a 25% CAGR through 2030. The company expects 80% of cloud storage to occur on hard disk drives (HDDs), with HDDs facing a capacity shortage. Western Digital has received orders for 2028 and 2029 HDD capacity, and will start shipping its first-generation HAMR HDD to two hyperscale customers in the first half of 2027.
This imminent supply shortage should further boost margins. Analysts are bullish on Western Digital's long-term earnings growth, and its EPS growth could outpace Nvidia and Micron. Currently, Western Digital trades at a favorable valuation and offers a 64% upside based on 12-month median price targets. Investors interested in a top growth stock at an attractive valuation should consider Western Digital.
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