NEW YORK, August 6, 2026, 09:08 EDT
- Shares of Western Digital fell roughly 15% in premarket U.S. trading on Thursday.
- Implied revenue per shipped terabyte increased by 18.3%, though growth in margins is expected to decelerate in the next quarter.
- Forecasts for fiscal first-quarter revenue and adjusted earnings beat consensus estimates prior to the report.
Shares of Western Digital Corporation NASDAQ:WDC dropped roughly 15% in premarket trading on Thursday. Despite reporting robust quarterly earnings and issuing an outlook that surpassed analyst expectations, the company could not meet high investor demands.
The stock surged to over three times its value in 2026 ahead of the report. The rally reflected expectations for continued AI demand, strong pricing and swift margin growth.
Demand remained strong. Western Digital delivered 231 exabytes, an increase of 22%. Revenue climbed 44% to $3.747 billion.
Company figures suggest implied revenue per shipped terabyte rose by 18.3%, consistent with management calling it a “high-teens” price jump. Growth in both volume and price mix resulted in a 43.8% increase in revenue. Western Digital Corporation
| Metric | Q4 FY2025 | Q4 FY2026 | Change |
|---|---|---|---|
| Revenue | $2.605 billion | $3.747 billion | +43.8% |
| Total exabytes shipped | 190 | 231 | +21.6% |
| Nearline exabytes | 170 | 209 | +22.9% |
| Implied revenue per shipped TB | $13.71 | $16.22 | +18.3% |
| Non-GAAP gross margin | 41.3% | 54.4% | +13.1 points |
Derived from stated revenue and exabytes. Serves as a general indicator of price and mix, not as a specified contract price.
The blend contributed to a non-GAAP gross margin of 54.4%. Still, the midpoint for the first quarter points to a sequential increase of just 1.1 percentage points, compared to the 3.9 point gain seen in Q4.
The quarter outperformed expectations set ahead of the report. Revenue was 1.5% above forecasts, and adjusted earnings per share topped estimates by 7.9%.
| Metric | Reported or guidance midpoint | Pre-report consensus estimate | Difference |
|---|---|---|---|
| Q4 revenue | $3.747 billion | $3.690 billion | 1.5% above |
| Q4 adjusted EPS | $3.56 | $3.30 | 7.9% higher |
| Q1 FY2027 revenue | $4.100 billion | $4.040 billion | 1.5% ahead |
| Q1 FY2027 adjusted EPS | $4.00 | $3.81 | 5.0% over |
Consensus figures reflect analyst estimates and are not derived from company-reported results. The first-quarter numbers are based on the midpoint of Western Digital’s non-GAAP outlook.
At these median values, revenue would grow by 9.4% compared to Q4, while adjusted EPS would climb 12.4%. Operating leverage continues to be robust, though the projected upside was limited.
Cash conversion also improved. Free cash flow totaled $1.281 billion, representing 34.2% of revenue. Free cash flow for the full year was $3.511 billion.
Chief Executive Irving Tan stated, “Data creation isn’t slowing. It’s accelerating.” Western Digital is now delivering 40-terabyte ePMR drives. The company aims to commence shipments of 44-terabyte HAMR drives in the first half of 2027. Investing.com
Cloud accounted for 89% of revenue in the quarter. Management also pointed to customer agreements stretching to 2031. With this level of visibility, renewal pricing is taking on greater significance.
The downturn extended to storage stocks. Sandisk Corporation NASDAQ:SNDK declined 9.2%. Seagate Technology Holdings plc NASDAQ:STX slipped 3.6%, and Micron Technology, Inc. NASDAQ:MU was down 3.7%.
| Security or benchmark | 2026 gain through August 5 | August 6 premarket move |
|---|---|---|
| Western Digital | Up over 200% | Down 14.6% at $443.30 |
| Sandisk | Up more than 400% | Fell 9.2% to $1,226.04 |
| Seagate Technology | — | Down 3.6% |
| Micron Technology | — | Shed 3.7% |
| Philadelphia Semiconductor Index | Close to 70% | — |
| S&P 500 | 12.8% | — |
Premarket quotations and shifts are based on the Reuters snapshot.
The trend points to investors interpreting the report mainly as information on pricing and margins, rather than a sign of weakening storage demand. Western Digital’s 18.3% increase in revenue per terabyte continues to underpin its earnings.
The report reflected strong positive analyst sentiment. Out of 30 ratings, 23 analysts issued Buy or Overweight recommendations. Five suggested Hold, with two assigning an Underweight rating.
| Recommendation | Three months ago | One month ago | Current |
|---|---|---|---|
| Buy | 17 | 18 | 18 |
| Overweight | 5 | 4 | 5 |
| Hold | 5 | 6 | 5 |
| Underweight | 1 | 2 | 2 |
| Sell | 0 | 0 | 0 |
| Consensus | Overweight | Overweight | Overweight |
The present survey might not capture all post-results actions released on Thursday.
The median price target was set at $620, marking an increase of approximately 40% over the premarket price. Forecasts varied from $450 to $1,050, reflecting significant differences in views on normalized margins.
Initial responses varied. Baird’s Tristan Gerra increased his price target to $630 from $450, keeping a Buy rating. Meanwhile, Summit Insights’ Kinngai Chan lowered Western Digital to Hold from Buy.
Risks: Cloud customers accounted for 89% of revenue, resulting in both hyperscaler concentration and contract timing risk. Margins could come under pressure from reduced AI capital spending, softening prices, or postponed drive qualifications. In addition, consumer and client demand is still vulnerable to lengthening replacement cycles.
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