Western Digital (NASDAQ:WDC) Posts Quarterly Earnings Results, Beats Estimates By $0.53 EPS

Key Points

• Western Digital beat quarterly expectations: Revenue rose 55% year over year to $4.38 billion, while EPS of $4.64 exceeded estimates by $0.53. Free cash flow reached approximately $1.4 billion, supported by stronger margins and demand.
• Management issued substantially stronger guidance, projecting second-quarter revenue of about $5.1 billion and EPS of $5.80, driven by robust demand for high-capacity HDDs from cloud, AI and enterprise customers.
• Execution risks remain: Western Digital plans elevated capital spending for HAMR technology and automation, while rising inventories, input-cost inflation and technology-transition risks could pressure future pricing and margins. Shares nevertheless fell 6.4% after the results amid a broader technology-sector selloff.

Western Digital (NASDAQ:WDC - Get Free Report) released its earnings results on Thursday. The data storage provider reported $4.64 earnings per share for the quarter, topping the consensus estimate of $4.11 by $0.53, FiscalAI reports. Western Digital had a net margin of 72.95% and a return on equity of 48.15%. The business had revenue of $4.38 billion for the quarter, compared to the consensus estimate of $4.14 billion.

Here are the key takeaways from Western Digital's conference call:

• Strong first-quarter performance: Revenue rose 55% year over year to $4.4 billion, gross margin expanded to 58.1%, EPS increased 161% to $4.64, and free cash flow reached $1.4 billion.
• Management raised its near-term outlook substantially, guiding for second-quarter revenue of $5.1 billion at the midpoint, up 69% year over year, with gross margin expected at 60%–61% and EPS of $5.80 ± $0.20.
• Demand for high-capacity HDDs remains robust, with visibility for major customers extending through 2030–2031. WD cited accelerating storage needs from cloud, AI inference, agentic AI, physical AI, enterprise, and NeoCloud customers.
• The product roadmap is progressing, including rapid adoption of 40-terabyte ePMR drives and planned HAMR volume shipments in the first half of calendar 2027. Exabyte growth is expected to accelerate through fiscal 2027 and 2028.
• WD plans to invest above its typical 4%–6% of revenue CapEx range over the next two years for HAMR-related heads and media technology and factory automation, while input-cost inflation for DRAM and NAND may temporarily limit cost-per-terabyte improvements.

Western Digital Stock Down 6.4%

Shares of WDC traded down $24.32 during trading hours on Thursday, reaching $354.19. The company's stock had a trading volume of 13,243,410 shares, compared to its average volume of 8,666,783. The firm has a market cap of $132.58 billion, a price-to-earnings ratio of 14.63, a P/E/G ratio of 1.54 and a beta of 2.11. Western Digital has a 1-year low of $121.71 and a 1-year high of $799.87. The company has a 50 day moving average of $438.14 and a two-hundred day moving average of $480.05.

Western Digital Announces Dividend

The firm also recently announced a quarterly dividend, which was paid on Thursday, September 17th. Stockholders of record on Tuesday, September 8th were issued a $0.15 dividend. The ex-dividend date was Tuesday, September 8th. This represents a $0.60 dividend on an annualized basis and a dividend yield of 0.2%. Western Digital's dividend payout ratio is currently 2.48%.

Insider Buying and Selling

In related news, insider Cynthia Tregillis sold 432 shares of the firm's stock in a transaction that occurred on Friday, September 4th. The shares were sold at an average price of $451.20, for a total transaction of $194,918.40. Following the completion of the sale, the insider directly owned 111,030 shares in the company, valued at approximately $50,096,736. This trade represents a 0.39% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the SEC, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, CEO Irving Tan sold 20,000 shares of the business's stock in a transaction that occurred on Tuesday, August 11th. The shares were sold at an average price of $444.97, for a total transaction of $8,899,400.00. Following the transaction, the chief executive officer directly owned 575,966 shares in the company, valued at $256,287,591.02. The trade was a 3.36% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last three months, insiders sold 24,629 shares of company stock worth $11,033,404. 0.20% of the stock is owned by company insiders.

Wall Street Analysts Forecast Growth

WDC has been the subject of several research analyst reports. Susquehanna upped their price target on shares of Western Digital from $360.00 to $500.00 and gave the company a "neutral" rating in a research report on Wednesday, July 8th. Wall Street Zen upgraded shares of Western Digital from a "buy" rating to a "strong-buy" rating in a research report on Saturday, October 17th. BNP Paribas Exane lifted their price objective on shares of Western Digital from $660.00 to $700.00 and gave the stock an "outperform" rating in a research report on Thursday, August 6th. Bank of America boosted their target price on shares of Western Digital from $720.00 to $800.00 and gave the company a "buy" rating in a research note on Wednesday. Finally, Citigroup reduced their target price on Western Digital from $800.00 to $740.00 and set a "buy" rating for the company in a report on Friday, August 7th. One equities research analyst has rated the stock with a Strong Buy rating, twenty have given a Buy rating and seven have assigned a Hold rating to the company. According to MarketBeat, the stock has a consensus rating of "Moderate Buy" and an average target price of $609.56.

Trending Headlines about Western Digital

Here are the key news stories impacting Western Digital this week:

• Positive Sentiment: Western Digital reported fiscal Q1 2027 revenue of $4.38 billion, up 55% year over year, while GAAP net income reached $1.78 billion and diluted EPS was $4.63. Non-GAAP EPS of $4.64 exceeded analyst expectations by approximately 13%. Western Digital surprises with strong Q3 but inventory levels increase
• Positive Sentiment: Management issued strong fiscal Q2 guidance, calling for revenue of about $5.1 billion and non-GAAP EPS of $5.80, both ahead of Wall Street expectations. Gross margin also improved substantially to 57.8% from 43.5% a year earlier. Western Digital Q1 Revenue Climbs 55% to $4.38 Billion
• Positive Sentiment: Western Digital raised its quarterly dividend 17% to $0.175 per share, while reporting $1.38 billion in free cash flow. The results reinforce the view that AI, cloud, and high-capacity storage demand are supporting pricing and profitability. Western Digital Profit Grows on Data Storage Demand
• Neutral Sentiment: The stock initially gained after the report but failed to hold those gains as investors focused on a severe technology and AI-sector selloff. Western Digital had already fallen sharply from its June peak, making the market particularly sensitive to guidance quality and forward demand signals. Western Digital beats earnings estimates, but AI selloff erases initial gains
• Negative Sentiment: Reports noted rising inventory levels, raising concerns that supply growth or weaker demand could eventually pressure pricing despite the upbeat near-term outlook. Analysts have also trimmed some fair-value estimates because of execution, HAMR technology-transition, and competitive-supply risks. Western Digital fair value trimmed as analysts weigh HDD demand and HAMR risks

Western Digital Company Profile

Western Digital Corporation NASDAQ: WDC is a data storage technology company that develops and manufactures hard disk drives (HDDs) and related storage solutions. Its products are used in data centers, cloud infrastructure, enterprise systems, personal computers, gaming platforms and external storage devices.

The company offers HDD-based products for business and consumer applications, including high-capacity drives designed for hyperscale and cloud data centers, enterprise storage environments, network-attached storage systems and personal computing.

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