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Higher Capacity HDDs Drive Western Digital's Revenue Growth
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Key Takeaways
Western Digital shipped 204 exabytes in fiscal Q1, up 23% year over year, driven by rising hyperscale demand.
WDC saw customers shift to higher-capacity HDDs, with 2.2M ePMR-based units shipped in the September quarter.
Western Digital advanced HAMR, with top seven customers placing orders into 2026 and one securing 2027 supply.
Western Digital Corporation’s ((WDC - Free Report) ) HDD business is emerging as a solid revenue growth driver, supported by a sustained shift toward higher-capacity drives and rising exabyte demand from large-scale customers. As a foundational player in the global data infrastructure ecosystem, the company continues to deliver strong value for mass storage applications. Its focus remains on advancing HDD technology that offers greater capacity, improved performance, enhanced energy efficiency and a lower total cost of ownership for customers.
In the fiscal first quarter, Western Digital shipped 204 exabytes of storage, representing a 23% year-over-year increase. Accelerating adoption of AI and other data-intensive workloads at hyperscale customers is driving robust demand for the company’s solutions. Customers are increasingly migrating to higher-capacity HDDs, with shipments of its latest ePMR-based products, supporting up to 26TB CMR and 32TB UltraSMR, exceeding 2.2 million units in the September quarter. The reliability, scalability and compelling TCO advantages of ePMR and UltraSMR technologies continue to underpin Western Digital’s strength in the data center market.
Building on this momentum, the company is advancing its next-generation HAMR drives. All top seven customers have issued purchase orders through the first half of 2026, with five extending through year-end, and one major hyperscale customer securing supply for all of 2027. These commitments highlight the critical role of Western Digital’s products in the AI data economy and reflect strong customer confidence in its transition to HAMR technology. It is making strong progress on HAMR development and remains on track to begin qualification with one hyperscale customer in the first half of 2026, expanding to up to three customers by year-end.
The qualification process focuses on ensuring top-tier reliability, quality and scalable performance, enabling rapid customer deployment once complete. This progress positions the company for volume production ramp-up in the first half of 2027. Meanwhile, its next-gen ePMR drives are set to complete qualification by early 2026, ensuring a smooth and cost-effective transition to HAMR.
Management also expects the proliferation of generative AI-driven storage deployments to result in a client and consumer device refresh cycle, and boost content growth in smartphone, gaming, PC and consumer in the long run. Increasing AI adoption is likely to drive increased storage demand across both HDD and Flash at the edge and core.
The company is gearing up for the second quarter of fiscal 2026. Management anticipates ongoing revenue growth, supported by strong data center demand and better profitability driven by increased adoption of high-capacity drives. Western Digital projects non-GAAP revenues of $2.9 billion (+/- $100 million), up 20% year over year.
Taking a Look at WDC’s Competitors
Pure Storage, Inc. ((PSTG - Free Report) ) continues to reshape the future of enterprise storage with innovations tailored for modern data workloads—particularly AI, containerization and high-performance computing (HPC). The company is gaining from healthy sales, solid enterprise and subscription momentum. Its Evergreen//One ensures SLA-backed performance, capacity and security with always-modern, disruption-free technology, while the rising uptake of Enterprise Data Cloud, hyperscaler gains and resilient execution support growth.
The company has topped its full-year hyperscale shipment forecast of 2 exabytes and expects further growth in the fiscal fourth quarter. Driven by momentum, it raised its fiscal 2026 revenue outlook to $3.63-$3.64 billion from $3.60-$3.63 billion, implying 14.5-14.9% year-over-year growth. For the fiscal fourth quarter, Pure Storage expects revenues in the $1.02-$1.04 billion band, indicating an increase of 17.1% at the midpoint from the year-ago level.
Micron Technology, Inc. ((MU - Free Report) ) is benefiting from the rapidly expanding AI-driven memory and storage markets. The positive impacts of inventory improvement across multiple end markets are driving top-line growth. The surging demand for HBM and robust DRAM pricing recovery will aid significant revenue and earnings growth in the coming quarters. Its solid financials, positive free cash flow and strong balance sheet provide the flexibility to invest in growth initiatives while enhancing shareholder value. Its long-term customer agreements and expanding AI partnerships reduce volatility and improve revenue visibility. For the fiscal second quarter, the company anticipates revenues of $18.7 billion (+/-$400 million).
WDC Price Performance, Valuation and Estimates
In the past three months, WDC’s shares have gained 62.7% compared with the Zacks Computer-Storage Devices industry’s growth of 23.8%.
Image Source: Zacks Investment Research
In terms of forward price/earnings, WDC’s shares are trading at 20.36X, down from the industry’s 19.68X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for WDC’s earnings for fiscal 2026 has been marginally revised up 0.4% to $7.66 over the past 60 days.
Image: Bigstock
Higher Capacity HDDs Drive Western Digital's Revenue Growth
Key Takeaways
Western Digital Corporation’s ((WDC - Free Report) ) HDD business is emerging as a solid revenue growth driver, supported by a sustained shift toward higher-capacity drives and rising exabyte demand from large-scale customers. As a foundational player in the global data infrastructure ecosystem, the company continues to deliver strong value for mass storage applications. Its focus remains on advancing HDD technology that offers greater capacity, improved performance, enhanced energy efficiency and a lower total cost of ownership for customers.
In the fiscal first quarter, Western Digital shipped 204 exabytes of storage, representing a 23% year-over-year increase. Accelerating adoption of AI and other data-intensive workloads at hyperscale customers is driving robust demand for the company’s solutions. Customers are increasingly migrating to higher-capacity HDDs, with shipments of its latest ePMR-based products, supporting up to 26TB CMR and 32TB UltraSMR, exceeding 2.2 million units in the September quarter. The reliability, scalability and compelling TCO advantages of ePMR and UltraSMR technologies continue to underpin Western Digital’s strength in the data center market.
Building on this momentum, the company is advancing its next-generation HAMR drives. All top seven customers have issued purchase orders through the first half of 2026, with five extending through year-end, and one major hyperscale customer securing supply for all of 2027. These commitments highlight the critical role of Western Digital’s products in the AI data economy and reflect strong customer confidence in its transition to HAMR technology. It is making strong progress on HAMR development and remains on track to begin qualification with one hyperscale customer in the first half of 2026, expanding to up to three customers by year-end.
The qualification process focuses on ensuring top-tier reliability, quality and scalable performance, enabling rapid customer deployment once complete. This progress positions the company for volume production ramp-up in the first half of 2027. Meanwhile, its next-gen ePMR drives are set to complete qualification by early 2026, ensuring a smooth and cost-effective transition to HAMR.
Management also expects the proliferation of generative AI-driven storage deployments to result in a client and consumer device refresh cycle, and boost content growth in smartphone, gaming, PC and consumer in the long run. Increasing AI adoption is likely to drive increased storage demand across both HDD and Flash at the edge and core.
The company is gearing up for the second quarter of fiscal 2026. Management anticipates ongoing revenue growth, supported by strong data center demand and better profitability driven by increased adoption of high-capacity drives. Western Digital projects non-GAAP revenues of $2.9 billion (+/- $100 million), up 20% year over year.
Taking a Look at WDC’s Competitors
Pure Storage, Inc. ((PSTG - Free Report) ) continues to reshape the future of enterprise storage with innovations tailored for modern data workloads—particularly AI, containerization and high-performance computing (HPC). The company is gaining from healthy sales, solid enterprise and subscription momentum. Its Evergreen//One ensures SLA-backed performance, capacity and security with always-modern, disruption-free technology, while the rising uptake of Enterprise Data Cloud, hyperscaler gains and resilient execution support growth.
The company has topped its full-year hyperscale shipment forecast of 2 exabytes and expects further growth in the fiscal fourth quarter. Driven by momentum, it raised its fiscal 2026 revenue outlook to $3.63-$3.64 billion from $3.60-$3.63 billion, implying 14.5-14.9% year-over-year growth. For the fiscal fourth quarter, Pure Storage expects revenues in the $1.02-$1.04 billion band, indicating an increase of 17.1% at the midpoint from the year-ago level.
Micron Technology, Inc. ((MU - Free Report) ) is benefiting from the rapidly expanding AI-driven memory and storage markets. The positive impacts of inventory improvement across multiple end markets are driving top-line growth. The surging demand for HBM and robust DRAM pricing recovery will aid significant revenue and earnings growth in the coming quarters. Its solid financials, positive free cash flow and strong balance sheet provide the flexibility to invest in growth initiatives while enhancing shareholder value. Its long-term customer agreements and expanding AI partnerships reduce volatility and improve revenue visibility. For the fiscal second quarter, the company anticipates revenues of $18.7 billion (+/-$400 million).
WDC Price Performance, Valuation and Estimates
In the past three months, WDC’s shares have gained 62.7% compared with the Zacks Computer-Storage Devices industry’s growth of 23.8%.
Image Source: Zacks Investment Research
In terms of forward price/earnings, WDC’s shares are trading at 20.36X, down from the industry’s 19.68X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for WDC’s earnings for fiscal 2026 has been marginally revised up 0.4% to $7.66 over the past 60 days.
Image Source: Zacks Investment Research
Currently, Western Digital sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.