Western Digital Corporation (WDC) Earnings
Western Digital Corporation is expected to report next earnings on October 29, 2026 (in NaN days), with a consensus EPS estimate of $4.04. WDC has beaten EPS estimates in 11 of its last 12 reported quarters (average surprise +11.3% over the last four).
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| Aug 5, 2026 | $3.29 | $3.56 | +8.3% | $3.7B | +3.5% |
| Apr 30, 2026 | $2.38 | $2.72 | +14.5% | $3.3B | +5.5% |
| Jan 29, 2026 | $1.93 | $2.13 | +10.4% | $3.0B | +1.9% |
| Oct 30, 2025 | $1.59 | $1.78 | +11.9% | $2.8B | +3.2% |
| Jul 30, 2025 | $1.48 | $1.66 | +12.2% | $2.6B | +5.4% |
| Apr 30, 2025 | $1.12 | $1.36 | +21.4% | $2.3B | -0.9% |
| Jan 29, 2025 | $1.35 | $1.77 | +31.1% | $4.3B | +0.6% |
| Oct 24, 2024 | $1.72 | $1.78 | +3.5% | $4.1B | -0.5% |
| Jul 31, 2024 | $1.18 | $1.44 | +22.0% | $3.8B | +0.5% |
| Apr 25, 2024 | $0.22 | $0.63 | +190.3% | $3.5B | +2.6% |
| Jan 25, 2024 | $-1.13 | $-0.69 | +38.9% | $3.0B | -8.4% |
| Jan 31, 2023 | $-0.08 | $-0.42 | -425.0% | $3.1B | +1.4% |
Source: company filings + earnings calendar. For informational purposes only — not investment advice.
Earnings call summary
Q4 FY2026 · August 5, 2026
AI summary of management’s prepared remarks and analyst Q&A. For informational purposes only — not investment advice.
Management highlights
### Full Fiscal Year 2026 Performance - Full year FY26 revenue grew 36% YoY to $12.9 billion, with gross margins expanding 970 basis points to 49.1%, and operating margins growing 1,290 basis points to 37.3%. - EPS more than doubled to $10.22, the company generated $3.5 billion in free cash flow (27% free cash flow margin), and returned $3.1 billion to shareholders, ending the quarter with a net positive cash position of $500 million. ### Secular Demand Drivers - AI-driven demand for storage is durable and accelerating: unlike reusable compute resources, data generated by AI workloads compounds continuously, creating ongoing capacity requirements. - The shift from AI training to inference and agentic AI has become more pronounced: inference generates continuous, persistent data, and agentic AI creates data at every workflow step, acting as a structural step-function driver of capacity-oriented storage demand. - Emerging physical AI (autonomous vehicles, robotics, industrial automation, humanoids) requires large synthetic dataset generation and storage, adding an additional long-term growth driver. - Approximately 80% of data stored in hyperscale data centers currently resides on HDDs, and this market share is expected to persist due to HDDs' unrivaled scale, cost efficiency, and power efficiency for long-term large-scale data retention. ### Product and Technology Roadmap Progress - The 40TB ePMR next-generation drives commenced shipments in Q4 FY26 and are entering volume production with two customers; the company is on track to have 50% of nearline exabytes on this platform by Q3 FY27. - UltraSMR technology is currently ramping with a third major hyperscale customer, and is expected to make up ~60% of nearline exabyte shipments by the end of FY27. - The 44TB Hammer product remains on track to ship in the first half of calendar 2027, with customer qualification feedback exceeding expectations for capacity, performance, and reliability. - High bandwidth HDDs, targeting up to 8x the throughput of current drives without corresponding power increases, are currently being sampled to five customers, expanding WD's addressable layers of the AI storage stack. - The customer qualification pipeline is broadening, with additional hyperscale and cloud customers advancing through qualification and deployment planning.
Guidance
For the first quarter of fiscal 2027 (Q1 FY27), management provided the following guidance: - Revenue is expected to be $4.1 billion ± $100 million, representing 45% YoY growth at the midpoint. - Gross margin is projected to be between 55% and 56%. - Operating expenses are expected to range from $390 million to $400 million. - Diluted non-GAAP EPS is expected to be $4.00 ± $0.15, based on a diluted share count of 388 million shares. - Management reaffirmed a long-term exabyte demand growth target of 25%+ YoY, supported by secular AI and cloud growth drivers, and maintained its long-term target of ~10% annual cost per terabyte reduction driven by product transitions to higher aerial density drives. - Management confirmed high conviction in ongoing gross margin expansion over future quarters, driven by higher capacity product ramps, improved TCO for customers that enables higher pricing, and ongoing cost per terabyte reductions.
Segment performance
For the fourth quarter of fiscal 2026 (Q4 FY26), Western Digital's total revenue was $3.75 billion, up 44% year-over-year (YoY). Segment results are as follows: - Cloud: Revenue of $3.3 billion, up 43% YoY, representing 89% of total revenue. Performance was driven by strong demand for high-capacity nearline products in a favorable pricing environment. - Client: Revenue of $225 million, up 61% YoY, representing 6% of total revenue. - Consumer: Revenue of $187 million, up 38% YoY, representing 5% of total revenue. Both Client and Consumer segments benefited from improved pricing across products.
Risks & headwinds
No material new risks or operational failures were discussed or disclosed during this earnings call. Management did not highlight any unexpected operational issues, supply chain disruptions, demand contractions, or regulatory changes that would materially impact expected performance.
Analyst Q&A
Q: A competitor saw stronger sequential growth and guided to much higher gross margins than WD's guidance. Is this due to an earlier Hammer ramp, contract timing, or other factors, and when will WD see further margin acceleration? /
A: Quarter-to-quarter gross margin and growth variations are normal, driven primarily by timing of long-term agreement (LTA) expirations and new contract pricing kick-ins. WD has already started shipping 40TB ePMR drives and is on track to hit 50% nearline penetration by Q3 FY27, which will drive upside from higher capacity drives and pricing. Ongoing operational efficiencies will also support continued margin expansion alongside strong exabyte and top line growth. Management remains confident in its long-term margin trajectory regardless of quarterly differences with competitors.
Q: Exabyte growth was 22% YoY this quarter, below the prior 30% trend. Is this a temporary slowdown, and what should we expect for growth going forward? /
A: Quarterly exabyte growth fluctuates based on customer product mix: if a quarter has more shipments of lower-capacity CMR products to certain customers, total exabytes per unit shipped will be lower, while quarters with higher UltraSMR volume deliver more exabytes for the same unit count. Customer purchasing is also lumpy rather than perfectly linear. On a full FY26 basis, exabyte growth was 25% YoY, in line with the 25%+ long-term target, and growth will accelerate as 40TB drives ramp in the second half of FY27.
Q: Gross margins between nearline and non-nearline products: how large is the delta, and will it narrow as non-nearline pricing improves? /
A: Currently, gross margins for nearline and non-nearline (client and consumer) products are in the same range, within 5 percentage points of each other, so there is very little meaningful differentiation between the segments today.
Q: What is the demand outlook from China hyperscalers and AI labs, and how does it impact the supply-demand balance? /
A: Management views the Asian/China AI market as a very positive opportunity. The proliferation of open-source AI models in the region drives broader AI adoption, and all model training and inference requires large amounts of persistent data storage. Regardless of AI model efficiency gains for compute and memory, storage requirements continue to compound. Inferencing specifically increases demand for high-capacity HDDs, as storing generated data is far more economical than re-running computations, which aligns with WD's product roadmap focus on higher capacity drives.