What Happened?

Shares of leading data storage manufacturer Western Digital (NASDAQ: WDC) fell 10.5% in the afternoon session after China imposed a 34% tariff on all U.S. imports amid escalating trade war tensions. This was especially rough for the US chipmakers because a big chunk of their business leans on demand out of China. The new tariffs not only threaten to erode profit margins but also risk reducing market share. 

Adding to the uncertainty, the Trump administration signaled the possibility of further regulatory action against the sector. Although semiconductor firms were notably excluded from the broad tariffs unveiled on April 2, 2025, their exclusion raised concerns that targeted restrictions could still be forthcoming.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Western Digital? Access our full analysis report here, it’s free.

What The Market Is Telling Us

Western Digital’s shares are quite volatile and have had 17 moves greater than 5% over the last year. But moves this big are rare even for Western Digital and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 5 months ago when the stock gained 13.1% on the news that the company reported strong third-quarter 2024 earnings with significant gross margin improvement, which helped to beat on adjusted operating profit and adjusted EPS. Notably, the cloud segment (54% of overall revenue) contributed the most to the top-line outperformance, accelerating 17% sequentially and 153% year on year. This was powered by what management considered "higher nearline shipments in HDD and enterprise SSD bit shipments to data center customers" and more than offsetting softness in the client and consumer segments. While guidance for next quarter's revenue and adjusted EPS slightly missed Wall Street's estimates, the market seemed to overlook this.

Western Digital is down 50.8% since the beginning of the year, and at $30.42 per share, it is trading 62.1% below its 52-week high of $80.24 from July 2024. Investors who bought $1,000 worth of Western Digital’s shares 5 years ago would now be looking at an investment worth $702.38.

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