Western Digital approves $4 billion buyback as AI chip demand surges

The data storage major has approved an additional $4 billion share repurchase programme, buoyed by rising demand for memory solutions used in AI servers and stronger financial performance amid global supply constraints.

Western Digital has announced a significant expansion of its share repurchase programme, with its board approving an additional $4 billion in buybacks, reflecting confidence in the company’s growth outlook as demand for memory chips used in artificial intelligence infrastructure continues to rise.

The announcement was welcomed by investors, with Western Digital’s shares gaining around 5 per cent in premarket trading. The stock has already climbed sharply this year, building on strong momentum from the previous year when its valuation surged amid improving fundamentals and optimism around AI-led demand. Industry-wide shortages of memory chips have further strengthened pricing power, as manufacturers struggle to keep pace with rising requirements from data centres, AI workloads and consumer electronics.

Strong outlook backed by AI infrastructure growth

As of the beginning of the week, Western Digital still had approximately $484 million available under a previous $2 billion buyback authorisation announced in May last year. The latest approval significantly expands the company’s capital return plans, signalling management’s confidence in sustained cash flows.

The company recently reinforced its positive outlook by forecasting fiscal third-quarter revenue and profit above market expectations. Western Digital is increasingly benefiting from strong sales of hard drives and flash storage products designed for AI servers, where large-scale data processing and storage capacity are critical.

Analysts note that the rapid adoption of generative AI and cloud-based services is driving a sharp rise in demand for high-capacity, high-performance storage solutions. At the same time, limited supply and longer lead times across the semiconductor industry are helping support margins for established players such as Western Digital.

With AI infrastructure spending expected to remain robust in the coming quarters, the company appears well positioned to capitalise on both favourable market conditions and disciplined capital allocation, even as broader challenges around capacity expansion and supply chain constraints persist.