TLDR
- WDC stock dropped around 15% pre-market despite beating earnings estimates on both EPS and revenue
- Adjusted EPS came in at $3.56 vs. the $3.31 estimate; revenue hit $3.75 billion, up 42% year-over-year
- Q1 FY2027 guidance was above consensus but showed a deceleration in sequential growth
- The stock had already rallied 201% year-to-date before the earnings print, setting a high bar
- Gross margin guidance of 55-56% fell short of rival Seagate’s 57%+ forecast
Western Digital posted a strong fiscal Q4 2026, but the market wasn’t impressed. The stock dropped roughly 15% in pre-market trading on Thursday after results that beat on both the top and bottom line.
Western Digital Corporation, WDC
The stock had already climbed 201% in 2026 heading into the print. That kind of run-up means the bar for a positive reaction is set very high.
Adjusted EPS came in at $3.56, ahead of the $3.31 analyst estimate. Revenue reached $3.75 billion, a 44% increase year-over-year and above the $3.69 billion Wall Street had expected.
$WDC (Western Digital) #earnings are out: pic.twitter.com/UwxUaSzTog
— The Earnings Correspondent (@earnings_guy) August 5, 2026
CEO Irving Tan pointed to the strong performance, saying “revenue increased 44% year over year, gross and operating margins expanded, and earnings per share more than doubled.”
CFO Kris Sennesael called fiscal 2026 “an outstanding year for WD, characterized by broadening demand, deeper customer engagement, and disciplined execution across all end markets.”
Guidance Fell Short of Expectations
For Q1 FY2027, Western Digital guided for EPS of $3.85 to $4.15 and revenue of $4.00 billion to $4.20 billion. Both ranges came in above analyst consensus.
The issue was the rate of improvement. The guidance pointed to a slowdown in the sequential pace of gains across revenue, margins, and earnings.
Investors who had priced in a continued steep acceleration were left disappointed. Even a beat wasn’t enough when the trajectory appears to be easing.
Gross margin guidance of 55% to 56% also raised eyebrows when compared to rival Seagate, which reported last week with guidance implying margins above 57% next quarter.
Western Digital attributed part of the margin gap to timing. Old long-term pricing agreements are rolling off, with new higher-priced contracts expected to replace them.
Broader Context
The stock had already fallen 5.4% during the regular session before earnings were released, a sign that some investors were already nervous.
The broader market offered no support for the argument that macro factors drove the decline. The S&P 500, Dow Jones, and Nasdaq all posted modest gains on the day.
Insider selling added to the pressure. Over the three months prior to earnings, insiders sold approximately $13.7 million in stock with no corresponding purchases.
SanDisk also reported earnings after the close on the same day. SK Hynix and SanDisk jointly unveiled a new High Bandwidth Flash standard at an industry conference, introducing fresh competition in the storage market.
WDC hit a 52-week high of $799.87 before Thursday’s selloff. The after-hours drop brought the stock to around $441.70, a decline of nearly $77 from the prior close.
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