Western Digital fits into what is known as our smart-system theme. And the smart-system theme is really all about making use of data, so making use of all the bits and bytes that are out there and making it usable.
And really what’s happening out there is, you know the likes of Microsoft (NASDAQ:MSFT) and Amazon, and Oracle (NYSE:ORCL) and Google (NASDAQ:GOOG), etc. are expanding their cloud business, which helps them analyze and perform compute work for all the data that is out there, and Western Digital is a major, major supplier into these hyper-scale data centers. Western Digital is one of the largest producers of storage chips, both the old-fashioned hard disk drives, one, as well as the newer technology flash memory systems.
And so what we are seeing here is there is a shortage of data chips, and so they are beginning to see some pricing power, and they also happen to be a technological leader in what they refer to as 3D NAND memory chips, which is just really another way of saying a denser chip that can hold more and more bits and bytes. And again, here is a company that has an 8% free cash flow yield, is doing a lot of things internally to cut costs and has a huge runway ahead of it as the companies that I mentioned earlier expand their hyper-scale data centers.
One fun fact associated with how much data is being generated, if you can think about the future of autonomous vehicles, they say that one autonomous car will create on a daily basis the same amount of data as 3,000 people. So I mean really this is a play on an immense, immense amount of data that is going to be created, that is being created that will also need to be analyzed in the future.
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