Western Digital reported fiscal fourth-quarter revenue of $3.75 billion, up 44% year-over-year, beating Wall Street’s consensus estimate of $3.69 billion and topping the $2.61 billion the company generated in the same period a year ago. The storage maker’s WDC stock performance tells a more complex story, however: despite the beat, shares fell 11% in extended trading on August 5, suggesting investors expected even stronger results given the company’s dominant position in AI data center demand.
The company’s adjusted earnings per share reached $3.56, beating estimates by $0.26 and reflecting a 109% increase from the prior year, according to investor filings. Non-GAAP gross margin expanded to 54.4%, while GAAP gross margin came in at 54.1%.
Western Digital’s explosive growth stems from a supply-demand imbalance in the storage industry. Earlier in 2026, the company announced that its entire year’s hard disk drive production capacity was sold out, with purchase orders from its top seven customers secured through 2026 and multi-year deals extending into 2028. According to the company’s filings, hyperscaler AI data centers now account for 89% of Western Digital’s revenue, while consumer demand has dropped to approximately 5%.
This concentration reflects the broader AI infrastructure build-out underway globally. Cloud giants and hyperscalers are racing to expand data center capacity to support large language models and other AI workloads, creating an unprecedented appetite for high-capacity storage. Western Digital has responded by accelerating development of ultra-high-capacity drives, including a 40-terabyte UltraSMR drive in qualification volume production and plans for 60-terabyte and eventually 100-terabyte drives by 2029.
Despite the Q4 beat, Western Digital guided for first-quarter 2027 revenue of $4.00 billion to $4.20 billion, compared to analyst consensus of $4.04 billion. This guidance range, while topping estimates at the midpoint, may have disappointed investors who have bid the stock up 176% year to date. The company also projected Q1 2027 adjusted earnings per share of $3.85 to $4.15.
Western Digital’s trajectory mirrors that of rival Seagate Technology, which also reported strong recent earnings driven by AI storage demand. Both companies have benefited from the shift toward enterprise and hyperscaler customers, though the concentration of revenue in a handful of mega-clients creates both opportunity and risk for investors monitoring the AI infrastructure cycle.
Sources
- Benzinga — Q4 revenue of $3.75 billion, beat consensus of $3.69 billion, stock fell 11% in extended trading
- SeekingAlpha — Q4 results and guidance topped Wall Street forecasts; shares fell 11% despite beats; stock up 176% year to date
- Investing.com — Q1 2027 revenue guidance of $4.00B-$4.20B versus consensus of $4.04B
- Western Digital Investor Relations — Q4 revenue of $3.75B, non-GAAP gross margin 54.4%, EPS guidance for Q1 2027
- StockTitan — Q4 revenue $3.75 billion, up 44% year-over-year; GAAP gross margin 54.1%
- Yahoo Finance / Tikr — 2026 HDD capacity 100% sold out; hyperscaler AI data centers 89% of revenue; consumer demand 5%; multi-year contracts through 2028
