Western Digital (NASDAQ:WDC) Issues Quarterly Earnings Results, Beats Expectations By $0.38 EPS

Key Points

• Western Digital beat Q3 expectations with $2.72 EPS (vs. ~$2.34 est.) and $3.34B revenue (+45% YoY), posted a 50.5% gross margin and guided Q4 to $3.10–$3.40 EPS.
• Management highlighted strong AI-driven demand and expects >25% long‑term exabyte CAGR, with roadmap momentum—40TB EPMR on track for H2 2026 and 44TB HAMR in customer qualification—though HAMR still carries execution/yield risk.
• Balance sheet and shareholder returns strengthened after monetizing SanDisk to cut about $3.1B of debt; WDC ended with roughly net cash ~$450M, generated ~$978M FCF, raised the dividend 20% and repurchased ~$752M of stock.

Western Digital (NASDAQ:WDC - Get Free Report) posted its earnings results on Thursday. The data storage provider reported $2.72 EPS for the quarter, beating the consensus estimate of $2.34 by $0.38, FiscalAI reports. Western Digital had a return on equity of 41.53% and a net margin of 35.52%.The firm had revenue of $3.34 billion for the quarter, compared to analysts' expectations of $3.23 billion. During the same period last year, the firm earned $1.36 EPS. The firm's revenue was up 45.5% compared to the same quarter last year. Western Digital updated its Q4 2026 guidance to 3.100-3.400 EPS.

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

• WD reported a strong quarter with $3.3B revenue (+45% YoY), $2.72 EPS (≈+97% YoY), 50.5% gross margin, and 222 exabytes shipped (+34% YoY), all above guidance.
• Management sees AI-driven secular tailwinds — agentic AI, inference, synthetic and physical AI — driving persistent storage needs and expects >25% long‑term exabyte CAGR.
• Product roadmap momentum — 40TB EPMR on track for H2 CY2026 volume, 44TB HAMR in qualification with four customers, and expanding UltraSMR adoption across major customers.
• Financial position strengthened — monetized SanDisk to cut ~$3.1B debt, achieved investment‑grade upgrades, ended with net cash ≈$450M, generated ~$978M free cash flow, raised dividend 20% and repurchased $752M of stock.
• HAMR is still in customer qualification with no explicit shipment share targets and ongoing yield/reliability work, creating execution risk and a phased adoption timeline for higher‑density supply.

Western Digital Price Performance

Shares of WDC stock traded up $21.76 during mid-day trading on Thursday, hitting $434.52. 11,400,055 shares of the stock traded hands, compared to its average volume of 6,454,714. Western Digital has a twelve month low of $43.60 and a twelve month high of $441.99. The firm has a market cap of $147.32 billion, a price-to-earnings ratio of 43.58, a price-to-earnings-growth ratio of 0.86 and a beta of 1.77. The company's 50-day simple moving average is $314.33 and its 200-day simple moving average is $233.19. The company has a debt-to-equity ratio of 0.34, a quick ratio of 1.19 and a current ratio of 1.46.

Trending Headlines about Western Digital

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

• Positive Sentiment: WDC beat Q3 estimates (EPS $2.72 vs. ~ $2.34–2.41) and reported revenue growth of ~45%, with conference materials and a slide deck available — results underpin the rally and justify re-rating on stronger profitability. MarketBeat Press Release / Slide Deck
• Positive Sentiment: Management guided Q4 EPS to $3.10–3.40 and revenue roughly $3.6–3.8B, above consensus — signaling sustained pricing power from enterprise AI storage demand. Reuters: WDC forecasts revenue above estimates
• Positive Sentiment: Peer signals: SanDisk and Seagate also flagged strong AI-related demand and higher revenue outlooks, giving sector-level validation that hyperscaler capex is driving near-term HDD/SSD consumption. Reuters: SanDisk joins peers signaling AI demand
• Positive Sentiment: Sector momentum from Seagate’s blowout results lifted investor appetite for WDC ahead of and after the print — reinforcing a near-term “picks-and-shovels” trade into storage suppliers. 247WallSt: HDD trade lifts WDC & STX
• Neutral Sentiment: Analysts remain constructive (some raised price targets; institutional notes like Bank of America were bullish), but consensus estimates were elevated into the print — meaning future upside depends on execution and whether demand stays strong. Barchart: Analysts bullish ahead of earnings
• Negative Sentiment: Despite the beat and upbeat guidance, some traders sold into the news — headlines and TV coverage called it a “buy the rumor, sell the news” episode after WDC’s large prior gains, producing intraday pullbacks. MarketWatch: Stock slides despite earnings beat
• Negative Sentiment: Several outlets noted late-day slips and profit-taking after the print; elevated valuation and very large short- and long-term moves increase volatility risk for investors entering new positions now. Yahoo Finance: Stock slips late despite beat

Insider Buying and Selling

In related news, insider Cynthia L. Tregillis sold 9,324 shares of Western Digital stock in a transaction on Wednesday, March 4th. The stock was sold at an average price of $268.27, for a total value of $2,501,349.48. Following the transaction, the insider directly owned 121,682 shares in the company, valued at $32,643,630.14. The trade was a 7.12% decrease in their position. The sale was disclosed in a legal filing with the SEC, which is available through this link. Also, CEO Irving Tan sold 20,000 shares of Western Digital stock in a transaction on Monday, February 2nd. The stock was sold at an average price of $255.44, for a total value of $5,108,800.00. Following the completion of the transaction, the chief executive officer owned 623,586 shares in the company, valued at $159,288,807.84. The trade was a 3.11% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. Over the last quarter, insiders have sold 92,711 shares of company stock valued at $24,300,404. Insiders own 0.18% of the company's stock.

Hedge Funds Weigh In On Western Digital

A number of hedge funds have recently modified their holdings of WDC. Rakuten Securities Inc. grew its holdings in shares of Western Digital by 4,070.0% in the 2nd quarter. Rakuten Securities Inc. now owns 417 shares of the data storage provider's stock worth $27,000 after acquiring an additional 407 shares during the last quarter. Swiss RE Ltd. acquired a new position in shares of Western Digital in the 4th quarter worth $32,000. JPL Wealth Management LLC acquired a new position in shares of Western Digital in the 3rd quarter worth $33,000. BOKF NA grew its holdings in shares of Western Digital by 6,700.0% in the 3rd quarter. BOKF NA now owns 272 shares of the data storage provider's stock worth $33,000 after acquiring an additional 268 shares during the last quarter. Finally, Transamerica Financial Advisors LLC grew its holdings in shares of Western Digital by 77.0% in the 4th quarter. Transamerica Financial Advisors LLC now owns 308 shares of the data storage provider's stock worth $53,000 after acquiring an additional 134 shares during the last quarter. 92.51% of the stock is currently owned by institutional investors and hedge funds.

Analysts Set New Price Targets

Several analysts recently commented on WDC shares. The Goldman Sachs Group set a $250.00 target price on Western Digital in a research report on Tuesday, February 3rd. Mizuho lifted their price target on Western Digital to $340.00 and gave the company an "outperform" rating in a research report on Wednesday, February 4th. Susquehanna reiterated a "neutral" rating and set a $285.00 price target on shares of Western Digital in a research report on Friday, February 6th. Wall Street Zen cut Western Digital from a "buy" rating to a "hold" rating in a research report on Sunday, April 12th. Finally, Zacks Research cut Western Digital from a "strong-buy" rating to a "hold" rating in a research report on Tuesday, March 31st. Nineteen investment analysts have rated the stock with a Buy rating and four have issued a Hold rating to the company's stock. According to MarketBeat.com, Western Digital currently has an average rating of "Moderate Buy" and an average target price of $320.38.

Western Digital Company Profile

Western Digital Corporation is a global data storage company that designs, manufactures and sells a broad range of storage devices and systems for personal, enterprise and cloud applications. Headquartered in San Jose, California, the company develops hard disk drives (HDDs), solid-state drives (SSDs), NAND flash components and finished storage products used in PCs, external storage, servers, network-attached storage (NAS) and embedded systems.

Its product portfolio spans consumer and commercial markets, including internal and external HDDs and SSDs, removable flash memory products and storage platforms for data center and enterprise environments.

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