NEW YORK, August 5, 2026, 17:04 EDT — Nasdaq’s main session has ended. After-hours trading has commenced.
- Western Digital shares dropped roughly 10% after the bell, hovering close to $466. During the standard session, the stock had already declined by 5.4%.
- Western Digital Corporation posted adjusted earnings for the fiscal fourth quarter that surpassed FactSet forecasts by 7.6%, while revenue came in 1.3% above analyst consensus.
- Guidance for the September quarter stayed ahead of estimates, but implied sequential gains in revenue, margins, and earnings decelerated.
Western Digital stock fell even after the company reported higher revenue, margins, and profit. Its outlook also surpassed Wall Street expectations.
The decision is seen as a valuation caution, rather than an indication of falling storage demand.
Western Digital shares nearly tripled over the course of 2026 prior to the report, leaving the stock with limited upside after a typical earnings beat.
The primary figure to track is the growth slope. Adjusted earnings increased by 31% sequentially during the June quarter. The midpoint guidance for September signals roughly 12% growth.
Revenue displays a similar trend, with quarterly growth slowing from 12% to close to 9%. The anticipated increase in gross margin shrinks from 390 basis points to 110 basis points.
The quarter topped all key metrics. Earnings exceeded expectations by a larger margin than revenue.
| Q4 FY2026 metric | Actual | FactSet estimate | Surprise | Prior guidance midpoint | Versus guidance |
|---|---|---|---|---|---|
| Revenue | $3.747 billion | $3.700 billion | +1.3% | $3.650 billion | +2.7% |
| Adjusted EPS | $3.56 | $3.31 | +7.6% | $3.25 | +9.5% |
| Non-GAAP gross margin | 54.4% | — | — | 51.5% | +290 bps |
Cash conversion improved as well. Free cash flow totaled $1.28 billion, representing 34% of revenue for the quarter. The non-GAAP operating margin rose to 44.2%.
The forecast projects continued growth, but each additional increase falls short of the rise in the preceding quarter.
| Growth measure | Q4 FY2026 change from prior quarter | Q1 FY2027 midpoint, change from previous quarter | Q1 midpoint compared to FactSet |
|---|---|---|---|
| Revenue | +12.3% | +9.4% | +1.0% |
| Adjusted EPS | +30.9% | +12.4% | +4.2% |
| Non-GAAP gross margin | +390 bps | +110 bps | — |
Western Digital CEO Irving Tan stated the company retains “continued confidence in the durability of demand.” CFO Kris Sennesael projected a midpoint gross margin of 55.5% and forecast adjusted earnings at $4.00 per share. Western Digital Corporation
Executives forecast revenue for the September quarter in the range of $4 billion to $4.2 billion, compared with a $4.06 billion estimate from FactSet. Guidance for adjusted earnings per share was set at $3.85 to $4.15, while analysts had expected $3.84.
The debate over valuation is notably broad. According to a Simply Wall St analysis featured on Yahoo, the fair value is calculated at $329.76. That figure stands approximately 29% under the post-earnings price, which is close to $466.
The discounted cash flow model on the same platform estimated a figure exceeding $1,017. These differing results highlight the significant impact that long-term margin projections have on WDC’s valuation.
Analyst forecasts ahead of the results showed varied views. The recommendations listed below all precede Wednesday’s earnings report.
| Analyst or consensus | Date | Recommendation | Target | Approximate move from $466 |
|---|---|---|---|---|
| MarketBeat consensus, 24 analysts | Aug. 5 | Moderate Buy; 20 buy or strong buy, four hold | $520.32 | +12% |
| Citigroup | July 13 | Buy | $800 | +72% |
| UBS | July 13 | Neutral | $560 | +20% |
| Wells Fargo | July 10 | Overweight | $730 | +57% |
| Susquehanna | July 8 | Neutral | $500 | +7% |
The target range holds more significance than the average. Neutral price targets are concentrated between $500 and $560. Bullish scenarios depend on sustained robust pricing and margins over multiple years.
Seagate Technology NASDAQ:STX, Western Digital’s primary HDD competitor, declined roughly 1% during the regular session. WDC slid 5.4% prior to its earnings announcement. The difference highlights the level of earnings risk investors had already priced into Western Digital shares.
Risks: Western Digital highlights its reliance on a small number of suppliers and significant customers. A decline in cloud spending may lower demand. Accelerated supply growth, tariff measures, pricing pressures, or delays in product launches could further impact margins.
The upcoming challenge is execution. Investors will monitor if Western Digital can achieve a 55.5% gross margin without implementing another significant price increase. Following Wednesday’s decline, simply hitting guidance targets may prove insufficient.
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