Seagate Technology Is Soaring After Its Strong Earnings Report. Should You Buy Western Digital Before Its Earnings Report?

Storage and representation stocks had experienced pullbacks amid wide macroeconomic jitters and valuation concerns surrounding artificial quality (AI) hardware trades. Then came Seagate Technology (NASDAQ: STX) with a beardown fourth-quarter, beat-and-raise performance, lifting the banal by much than $100 betwixt its adjacent connected July 28, erstwhile it announced earnings, and its adjacent connected July 30.

Because Seagate and Western Digital (NASDAQ: WDC) run arsenic a choky duopoly successful the high-capacity, hard disk thrust (HDD) market, Seagate's show offers wide visibility into the underlying wellness of the information retention manufacture and Western Digital's ain performance.

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That's bully quality for investors successful Western Digital, which reports its Q4 results connected Aug. 5. Its shares roseate 15% betwixt the stock's adjacent connected July 28 and its adjacent connected July 30. Here are 3 reasons wherefore Western Digital's banal could leap higher aft it reports earnings, and 1 crushed it won't:

Seagate blew past analysts' statement estimates

Seagate reported a 48% year-over-year Q4 gross surge, driven chiefly by unreality information centers and hyperscalers purchasing high-capacity nearline drives for AI workloads. Management noted that customers are securing capableness commitments good into aboriginal years. This straight dispels caller marketplace concerns astir a imaginable slowdown successful AI infrastructure spending, confirming that hyperscaler request for mass-capacity retention remains exceptionally robust, a inclination that straight benefits Western Digital's endeavor HDD division.

Western is forecasting Q4 gross of $3.65 billion, representing a year-over-year summation of 36.5%. It besides said it expects non-GAAP gross borderline of 51.5%, up 1,020 ground points from the aforesaid 4th a twelvemonth ago, and non-GAAP net per stock (EPS) of $3.25, up 95.8%, twelvemonth implicit year. If it tin scope oregon transcend those numbers, investors volition bargain alternatively than merchantability connected the news.

The banal is inactive disconnected its 52-week highs

While Western Digital is trading astatine somewhat much than 31 times trailing earnings, it's really not that precocious considering that Seagate's valuation is astir treble that level. Western, contempt its caller stock run-up, is inactive trading astatine a discount to its 52-week precocious of $799.87, showing there's inactive plentifulness of country for the banal to climb.