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These Are Western Digital’s Key Growth Drivers in Fiscal 2018

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Mar. 13 2018, Updated 7:33 a.m. ET

Healthy macro environment

Western Digital (WDC) has listed several trends and factors that are likely to drive revenue for the firm in 2018 as well as the long term. WDC believes the global economic environment is healthy with major markets such as the United States, China (FXI), and the European Union all experiencing rising GDP (gross domestic product). The firm expects this to positively impact IT spending as well.

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Increase in data creation

Data creation has been growing exponentially all over the world. The value of data is also rising driven by the advancement of fast-growing technologies such as cloud computing, artificial intelligence (or AI), IoT (Internet of Things), and mobility. This growth in data also creates a need for data storage and secure storage infrastructure. At the recent JP Morgan (JPM) conference, WDC CFO Mark Long stated the company expects the CAGR (compounded annual growth rate) for data to be 30% over the next few years, which augurs well for storage companies including NetApp (NTAP), Seagate (STX), and IBM (IBM).

Increase in capital expenditure spending by cloud service providers

Driven by the rise in data creation, cloud service providers are increasing capital expenditure spending to accommodate this growth. During WDC’s the fiscal 2Q18 earnings call, CEO Steve Milligan stated, “The healthy pace of data center build out has resulted in a recent reacceleration of demand for a high capacity enterprise hard drives. Against this backdrop, we are well positioned with our powerful platform to enable our broad customer base to capture, preserve, access and transform an ever increasing diversity of data.”

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