Western Digital reported fiscal first-quarter EPS of $4.64, beating the consensus estimate of $4.11, on revenue of $4.38 billion, up 55.5% year over year and above analysts' $4.14 billion estimate. Gross margin reached 58.1% and free cash flow was $1.4 billion. Management guided for second-quarter revenue of about $5.1 billion and EPS of $5.80 ± $0.20, with gross margin of 60%–61%, citing robust demand for high-capacity HDDs with visibility from major customers through 2030–2031. The company also raised its quarterly dividend to $0.1750 from $0.15.
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- Western Digital Lost One Third Its Value Over 3 Months: It’S Ready to Provide 175% Returns Says This Wall Street Pro
Western Digital (WDC) trades at $380.71, down 32.4% over three months from $563.14, despite beating earnings five straight times and posting fiscal Q4 revenue of $3.75 billion, up 43.8%. The selloff was partly driven by a Nikkei report that Toshiba plans to invest about ¥60 billion ($380 million) to double hard-disk-drive production capacity by fiscal 2027, challenging the supply discipline that supports HDD pricing. Gross margin rose from 43.9% to 54.4% across fiscal 2026, guidance for the current quarter is 55–56%, and customers have signed long-term agreements reaching 2029, 2030 and 2031. The average analyst price target is $668.50 (75.6% upside), while the stock is still up 121.24% year to date. The article says the bullish case depends on long-term contract pricing and margins holding, while Toshiba's added capacity could push down pricing per terabyte.
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Western Digital (NASDAQ: WDC) closed at $397.28 on October 9 and has returned 13.4% over the past six months, trailing both the Insider Monkey Billionaire Index (24.3%) and the State Street SPDR S&P 500 ETF Trust (15.1%). The article argues that most of the reported net profit came from marking up a retained SanDisk stake after its February 2025 separation, while free cash flow came in well below net income. It calls the 43.80% revenue growth and 43.61% operating margin remarkable, but says they reflect a storage cycle at its peak, when demand outpaces drive manufacturing capacity. According to the article, a forward P/E of 12.40 looks cheap on peak earnings, while a price-to-book of 18.99 shows the stock is expensive relative to its assets. At the end of Q2 2026, 98 hedge funds held the stock with a combined value of about $9.94 billion, up from 83 funds and $6.57 billion the previous quarter.
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Western Digital's fiscal first-quarter 2027 revenue rose 55% year over year to $4.38 billion, above management's $4.0–4.2 billion guidance range, while non-GAAP EPS climbed 161% and the quarterly dividend rose 17% to $0.175 per share. Average price per terabyte increased 28%, adjusted gross margin reached 58.1%, and fiscal Q2 guidance calls for 66%–72% revenue growth, around $5.1 billion at the midpoint. Shares, at roughly $353, are about 53% below their June 18 record close of about $746, as investors worry that hard drive pricing could turn. Management said demand visibility extends through 2030 and 2031 for its top seven customers, while the CFO said price-per-terabyte growth will likely slow eventually. The author judges that much of the risk of a pricing slowdown is already reflected in the share price, says he would consider a small position, and wants to see price per terabyte keep rising into 2027.
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Seagate Technology (STX) shares fell 15.09% in one week to $753.25, even though analysts made no downward earnings estimate revisions, and the average price target of $1,142.17 implies 51.6% upside. Fiscal 2026 revenue rose 34.06% to $12.195 billion with record free cash flow of $3.1 billion, and the stock is up 174.44% this year, though it sits about 34% below its 52-week high of $1,143.27 after Barron's flagged a Toshiba problem for hard drive makers. Management said nearline capacity is almost fully allocated through calendar 2027, and Seagate has beaten EPS estimates for five straight quarters, with fiscal Q1 EPS guidance of $7.30. Risks include data center sales making up 80% of revenue and reliance on a few hyperscalers, a beta of 2.081, competition from Toshiba and Western Digital, and exchangeable notes due 2028 that could dilute shareholders. Of the 25 covering analysts, 4 rate the stock Strong Buy, 18 Buy, 2 Hold and 1 Strong Sell.
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