Overview
- Western Digital reported a materially stronger quarter with $3.34 billion in revenue, 50.5% gross margin, $2.72 in EPS and nearly $1 billion in free cash flow, a performance the company says reflects heavy hyperscaler/cloud demand.
- The company gave upbeat Q4FY26 guidance that calls for roughly $3.6 billion in revenue, EPS near $3.25 and further margin expansion, and it raised the quarterly dividend by 20% to $0.15 per share.
- Market reaction has included analyst upgrades and a higher price target from Wells Fargo, moves that helped re‑rate the stock after a sharp year‑to‑date and one‑year rally reported in coverage.
- Western Digital says it will begin 40TB drive production in the second half of calendar 2026 and is pursuing a path to 100TB+ capacities with broader Ultra SMR use among hyperscalers, a roadmap that the company frames as central to storing persistent AI datasets.
- Despite the bullish case, the stock carries high volatility and execution risk because of supply constraints for components, competition on capacity technologies and the need to scale new drive designs for hyperscaler customers.