Western Digital (NASDAQ:WDC) Releases Earnings Results, Beats Estimates By $0.20 EPS

Key Points

• Beat and upbeat guidance: Western Digital reported $2.13 EPS vs. $1.93 expected and $3.02B revenue (up 25% YoY) with a 46.1% gross margin, and guided Q3 revenue of ~ $3.2B with a 47%–48% gross margin.
• Demand and product momentum: Shipments of 215 EB (up 22% YoY), cloud revenue at 89%, >3.5M latest‑gen ePMR drives shipped and UltraSMR mix over 50% underline strong customer demand, while HAMR and next‑gen ePMR qualifications with hyperscalers are progressing toward a targeted CY2027 ramp.
• Cash generation and shareholder returns: Q2 free cash flow was $653M with $3.2B net liquidity, $615M of buybacks this quarter (part of a $2B program), $1.4B returned since Q4 FY25, and a new quarterly dividend announced alongside plans to monetize remaining SanDisk shares to reduce debt.

Western Digital (NASDAQ:WDC - Get Free Report) announced its earnings results on Thursday. The data storage provider reported $2.13 earnings per share (EPS) for the quarter, topping analysts' consensus estimates of $1.93 by $0.20, FiscalAI reports. The company had revenue of $3.02 billion for the quarter, compared to analyst estimates of $2.93 billion. Western Digital had a return on equity of 30.89% and a net margin of 21.37%.Western Digital's revenue for the quarter was up 25.2% compared to the same quarter last year. During the same period in the previous year, the firm earned $1.77 earnings per share.

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

• Western Digital beat expectations in Q2, reporting $3.0B revenue (up 25% YoY), $2.13 EPS (up 78% YoY) and a 46.1% gross margin, and guiding Q3 revenue of ~$3.2B with 47%–48% gross margin.
• Demand remained strong and visible—215 EB shipped (up 22% YoY), cloud was 89% of revenue, >3.5M latest-generation ePMR drives shipped (up to 32TB), UltraSMR mix crossed 50% and major customers have firm POs and multi-year LTAs through 2026–2028.
• HAMR and next‑gen ePMR momentum accelerated: company began HAMR and next‑gen ePMR qualifications with hyperscalers, acquired laser/IP assets to support HAMR, and expects HAMR ramp (targeted start CY2027) to be neutral-to-accretive to gross margins.
• Strong cash generation and shareholder returns: Q2 free cash flow was $653M, net liquidity $3.2B, $615M of buybacks this quarter (part of a $2B program), $1.4B returned since Q4 FY25, and a new quarterly dividend of $12.50 per share; remaining SanDisk shares are planned to be monetized to reduce debt.

Western Digital Trading Down 0.5%

Shares of Western Digital stock opened at $278.41 on Friday. Western Digital has a 1 year low of $28.83 and a 1 year high of $285.42. The company's fifty day simple moving average is $191.38 and its 200-day simple moving average is $135.34. The company has a market cap of $95.19 billion, a price-to-earnings ratio of 40.53, a PEG ratio of 1.33 and a beta of 1.78. The company has a current ratio of 1.21, a quick ratio of 0.94 and a debt-to-equity ratio of 0.42.

Key Headlines Impacting Western Digital

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

• Positive Sentiment: Q2 beat: WDC reported $2.13 EPS and $3.02B revenue, topping consensus estimates and showing a meaningful year‑over‑year improvement in profit margins. This is the primary driver behind investor optimism. Read More.
• Positive Sentiment: Upbeat guidance: Management forecast Q3 revenue above Street estimates, citing sustained demand for HDDs and flash storage from AI servers — reinforcing the view that AI-driven data center demand is driving growth. Read More.
• Positive Sentiment: Sector tailwind: Strong results from peer Seagate helped lift WDC ahead of its report as investors priced in continued strength across storage names. Read More.
• Neutral Sentiment: Financial detail & investor materials: The company posted a $1.84B profit and provided a press release, slide deck and conference call — useful for modeling forward margins and capacity plans but not market-moving by itself. Read More.
• Neutral Sentiment: Analyst revisions: Several analysts revised forecasts higher into the print, which supports the bullish thesis but also means expectations are elevated. Read More.
• Negative Sentiment: Profit-taking and overbought technicals: WDC had run to record highs ahead of earnings, prompting take‑profits and triggering “overbought” warnings that can pressure shares short‑term. Read More.
• Negative Sentiment: Market commentary caution: Media/TV commentators have advised against “chasing” high‑momentum memory/storage names, which can amplify short-term selling after big moves. Read More.

Insider Activity at Western Digital

In other Western Digital news, Director Kimberly Alexy sold 1,768 shares of Western Digital stock in a transaction that occurred on Tuesday, November 25th. The stock was sold at an average price of $154.00, for a total transaction of $272,272.00. Following the sale, the director directly owned 3,585 shares of the company's stock, valued at approximately $552,090. The trade was a 33.03% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through this link. Also, Director Roxanne Oulman sold 1,800 shares of the business's stock in a transaction on Tuesday, November 25th. The shares were sold at an average price of $154.42, for a total value of $277,956.00. Following the completion of the sale, the director directly owned 3,863 shares in the company, valued at approximately $596,524.46. This represents a 31.79% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. In the last quarter, insiders have sold 26,816 shares of company stock worth $4,116,148. 0.18% of the stock is owned by company insiders.

Institutional Investors Weigh In On Western Digital

Institutional investors and hedge funds have recently made changes to their positions in the company. CIBC Bancorp USA Inc. acquired a new position in Western Digital in the third quarter valued at about $5,755,000. Centaurus Financial Inc. bought a new position in shares of Western Digital during the 3rd quarter valued at about $392,000. Wilmington Savings Fund Society FSB grew its position in shares of Western Digital by 4.2% in the 3rd quarter. Wilmington Savings Fund Society FSB now owns 2,993 shares of the data storage provider's stock valued at $359,000 after purchasing an additional 120 shares during the period. Captrust Financial Advisors increased its stake in Western Digital by 10.7% during the 3rd quarter. Captrust Financial Advisors now owns 27,398 shares of the data storage provider's stock worth $3,289,000 after purchasing an additional 2,657 shares in the last quarter. Finally, Coldstream Capital Management Inc. raised its holdings in Western Digital by 30.8% during the 3rd quarter. Coldstream Capital Management Inc. now owns 8,308 shares of the data storage provider's stock worth $997,000 after buying an additional 1,956 shares during the period. Institutional investors own 92.51% of the company's stock.

Wall Street Analyst Weigh In

A number of equities research analysts have commented on WDC shares. Evercore ISI restated an "outperform" rating and set a $230.00 price objective on shares of Western Digital in a research report on Friday, January 16th. Weiss Ratings restated a "hold (c+)" rating on shares of Western Digital in a report on Monday, December 29th. UBS Group upped their price objective on shares of Western Digital from $145.00 to $230.00 and gave the company a "neutral" rating in a research note on Tuesday, January 20th. Cantor Fitzgerald restated an "overweight" rating and set a $250.00 price target on shares of Western Digital in a report on Tuesday, December 16th. Finally, China Renaissance started coverage on shares of Western Digital in a research note on Friday, December 5th. They issued a "buy" rating and a $193.00 price target on the stock. One research analyst has rated the stock with a Strong Buy rating, eighteen have assigned a Buy rating and five have issued a Hold rating to the company's stock. According to data from MarketBeat, the company has an average rating of "Moderate Buy" and an average price target of $207.48.

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.