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Western Digital beat Q4 estimates as adjusted EPS reached $3.56 and revenues totaled $3.75 billion.
WDC guides fiscal Q1 revenues to $4.1 billion, with 55-56% gross margin and adjusted EPS of $4.00.
Western Digital is ramping 40TB ePMR and UltraSMR as AI, cloud and long-retention storage demand expands.
Western Digital Corporation (WDC - Free Report) used its fourth-quarter fiscal 2026 call to frame data growth from inference, agentic AI and physical AI as a durable storage driver rather than a one-time infrastructure cycle. Management paired that demand view with longer customer visibility, higher-capacity products and disciplined supply.
WDC’s fourth-quarter fiscal 2026 adjusted earnings of $3.56 per share exceeded the Zacks Consensus Estimate of $3.35. Revenues of $3.75 billion also topped the consensus estimate of $3.70 billion by 1.10%.
Western Digital Corporation Price, Consensus and EPS Surprise
CFO Kris Sennesael guided first-quarter fiscal 2027 revenues to $4.1 billion, plus or minus $100 million. The midpoint represents 45% year-over-year growth.
Non-GAAP gross margin is expected at 55-56%, with operating expenses of $390-$400 million. Adjusted earnings are projected at $4.00 per share, plus or minus 15 cents.
Sennesael tied the outlook to strong demand, improving visibility and favorable pricing across cloud, consumer and client markets. He also said technology transitions should support more exabyte shipments without adding unit capacity.
Western Digital Expands the AI Storage Case
CEO Irving Tan said AI storage demand is broadening from model training toward inference, agentic workflows and physical AI. These workloads continuously create and retain data, increasing the need for economical capacity storage.
Tan also emphasized that core cloud services remain an important growth source. Video collaboration, cloud applications and expanding data retention add demand alongside AI deployments.
Management said roughly 80% of data stored in hyperscale data centers resides on hard disk drives. Tan attributed that position to HDD scale, economics and power efficiency for long-retention storage.
WDC Advances Its Capacity Road Map
Tan said Western Digital began shipping 40-terabyte ePMR drives in the June quarter and entered volume production with two customers. The company expects that platform to exceed 50% of nearline bits by the fiscal third quarter of 2027.
UltraSMR is ramping with a third major customer and is expected to represent about 60% of nearline exabyte shipments when fiscal 2027 ends. A 44-terabyte HAMR product remains scheduled for the first half of calendar 2027.
High-bandwidth drives are sampling with five customers. Management is targeting up to eight times the throughput of current drives without a corresponding increase in power consumption.
Western Digital Converts Pricing Into Margin
Sennesael said fourth-quarter non-GAAP gross margin reached 54.4%, up 1,310 basis points year over year. Non-GAAP operating margin rose to 44.2%, supported by pricing, product mix and manufacturing execution.
The blended year-over-year price increase per terabyte moved from the high single digits in the prior quarter to the high teens. Tan said nearline pricing remains structured to provide predictable economics through long-term agreements.
Sennesael said cost per terabyte fell about 8% year over year and should decline around 10% over the mid to long term. Higher areal density and capacity are central to that cost path.
WDC Q&A Tests Exabyte Growth and Visibility
An Evercore ISI analyst questioned the slowdown in exabyte growth. Tan said quarterly shipments vary with customer and product mix, while management continues to expect demand growth above 25% over time.
A Cantor Fitzgerald analyst asked about customer visibility and contracts. Tan said discussions are underway for long-term agreements covering calendar 2029 through 2031, with volume needs clearer than the commercial pricing structures.
A Morgan Stanley analyst asked about emerging demand sources. Tan said neoclouds, frontier AI labs, sovereign customers and physical AI companies are seeking supply, including an autonomous-vehicle customer whose calendar 2027 exabyte needs increased multiple times.
Western Digital Prioritizes Cash Returns
Sennesael said the company generated $1.3 billion of free cash flow in the quarter and ended with $1.6 billion of cash and $1.1 billion of debt. That produced a net cash position of roughly $500 million.
Management described $1 billion of quarterly repurchase activity, including $328 million used to settle a conversion premium in cash. The board also declared a 15-cent quarterly dividend.
The call closed with confidence in demand durability, product execution and continued margin expansion. Management's operating focus remains increasing capacity value while lowering cost per terabyte.
WDC's Zacks Signals Show a Split Profile
WDC sports a Zacks Rank #1 (Strong Buy), which reflects favorable earnings-estimate revisions and stronger near-term performance potential under the Zacks framework. Its Growth Score of B is favorable. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Value, Momentum and VGM Scores are all F, indicating weak characteristics in those styles despite the top Rank. Style Scores complement the Zacks Rank, and the Zacks Rank can change as analysts revise estimates after the just-reported results.
View the Zacks #1 Rank List
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WDC Q4 Earnings Call Highlights AI Storage Demand
Key Takeaways
Western Digital Corporation (WDC - Free Report) used its fourth-quarter fiscal 2026 call to frame data growth from inference, agentic AI and physical AI as a durable storage driver rather than a one-time infrastructure cycle. Management paired that demand view with longer customer visibility, higher-capacity products and disciplined supply.
WDC’s fourth-quarter fiscal 2026 adjusted earnings of $3.56 per share exceeded the Zacks Consensus Estimate of $3.35. Revenues of $3.75 billion also topped the consensus estimate of $3.70 billion by 1.10%.
Western Digital Corporation Price, Consensus and EPS Surprise
Western Digital Corporation price-consensus-eps-surprise-chart | Western Digital Corporation Quote
WDC Guides to Another Growth Quarter
CFO Kris Sennesael guided first-quarter fiscal 2027 revenues to $4.1 billion, plus or minus $100 million. The midpoint represents 45% year-over-year growth.
Non-GAAP gross margin is expected at 55-56%, with operating expenses of $390-$400 million. Adjusted earnings are projected at $4.00 per share, plus or minus 15 cents.
Sennesael tied the outlook to strong demand, improving visibility and favorable pricing across cloud, consumer and client markets. He also said technology transitions should support more exabyte shipments without adding unit capacity.
Western Digital Expands the AI Storage Case
CEO Irving Tan said AI storage demand is broadening from model training toward inference, agentic workflows and physical AI. These workloads continuously create and retain data, increasing the need for economical capacity storage.
Tan also emphasized that core cloud services remain an important growth source. Video collaboration, cloud applications and expanding data retention add demand alongside AI deployments.
Management said roughly 80% of data stored in hyperscale data centers resides on hard disk drives. Tan attributed that position to HDD scale, economics and power efficiency for long-retention storage.
WDC Advances Its Capacity Road Map
Tan said Western Digital began shipping 40-terabyte ePMR drives in the June quarter and entered volume production with two customers. The company expects that platform to exceed 50% of nearline bits by the fiscal third quarter of 2027.
UltraSMR is ramping with a third major customer and is expected to represent about 60% of nearline exabyte shipments when fiscal 2027 ends. A 44-terabyte HAMR product remains scheduled for the first half of calendar 2027.
High-bandwidth drives are sampling with five customers. Management is targeting up to eight times the throughput of current drives without a corresponding increase in power consumption.
Western Digital Converts Pricing Into Margin
Sennesael said fourth-quarter non-GAAP gross margin reached 54.4%, up 1,310 basis points year over year. Non-GAAP operating margin rose to 44.2%, supported by pricing, product mix and manufacturing execution.
The blended year-over-year price increase per terabyte moved from the high single digits in the prior quarter to the high teens. Tan said nearline pricing remains structured to provide predictable economics through long-term agreements.
Sennesael said cost per terabyte fell about 8% year over year and should decline around 10% over the mid to long term. Higher areal density and capacity are central to that cost path.
WDC Q&A Tests Exabyte Growth and Visibility
An Evercore ISI analyst questioned the slowdown in exabyte growth. Tan said quarterly shipments vary with customer and product mix, while management continues to expect demand growth above 25% over time.
A Cantor Fitzgerald analyst asked about customer visibility and contracts. Tan said discussions are underway for long-term agreements covering calendar 2029 through 2031, with volume needs clearer than the commercial pricing structures.
A Morgan Stanley analyst asked about emerging demand sources. Tan said neoclouds, frontier AI labs, sovereign customers and physical AI companies are seeking supply, including an autonomous-vehicle customer whose calendar 2027 exabyte needs increased multiple times.
Western Digital Prioritizes Cash Returns
Sennesael said the company generated $1.3 billion of free cash flow in the quarter and ended with $1.6 billion of cash and $1.1 billion of debt. That produced a net cash position of roughly $500 million.
Management described $1 billion of quarterly repurchase activity, including $328 million used to settle a conversion premium in cash. The board also declared a 15-cent quarterly dividend.
The call closed with confidence in demand durability, product execution and continued margin expansion. Management's operating focus remains increasing capacity value while lowering cost per terabyte.
WDC's Zacks Signals Show a Split Profile
WDC sports a Zacks Rank #1 (Strong Buy), which reflects favorable earnings-estimate revisions and stronger near-term performance potential under the Zacks framework. Its Growth Score of B is favorable. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Value, Momentum and VGM Scores are all F, indicating weak characteristics in those styles despite the top Rank. Style Scores complement the Zacks Rank, and the Zacks Rank can change as analysts revise estimates after the just-reported results.