TLDR
- Western Digital (WDC) stock traded at $351.30 in premarket Friday, down 1%, after a 6% drop Thursday.
- Adjusted earnings were $4.64 a share on $4.4 billion in revenue, beating estimates of $4.11 and $4.1 billion.
- The company guided December quarter revenue to $5.1 billion, well above the $4.6 billion estimate.
- A Nikkei report that Toshiba plans to double AI drive capacity has weighed on the stock.
- Evercore ISI reiterated its Outperform rating and $575 price target.
Western Digital (WDC) stock traded at $351.30 in premarket Friday, down about 1%. It fell 6% in regular trading Thursday.
Western Digital Corporation, WDC
The drop came even though the company beat fiscal first-quarter estimates. The stock is now 53% below its June 18 closing high.
Adjusted earnings came in at $4.64 a share, compared with the $4.11 FactSet estimate. Revenue rose 55% from a year ago to $4.4 billion.
Margins and Outlook
Adjusted gross margin reached 58.1%, up from 54.4% last quarter and 43.9% a year ago. Evercore ISI pointed to a 370 basis point jump from the prior quarter.
WESTERN DIGITAL $WDC Q1’27 EARNINGS HIGHLIGHTS
🔹 Revenue: $4.38B (Est. $4.13B) 🟢; +55% YoY
🔹 Adj. EPS: $4.64 (Est. $4.07) 🟢; +161% YoY
🔹 GAAP EPS: $4.63
🔹 Adj. Gross Margin: 58.1%; +1,420 bps YoYQ2 FY27 Guide:
🔹 Revenue: $5.00B-$5.20B (Est. $4.57B) 🟢
🔹 Adj. EPS:… pic.twitter.com/LRAWJr9ulz— Wall St Engine (@wallstengine) October 22, 2026
For the December quarter, the company guided to revenue of $5.1 billion, plus or minus $100 million. Analysts had expected $4.6 billion.
Gross margin is forecast at 60% to 61%. Evercore says the midpoint implies about 69% year-over-year revenue growth.
Shipments totaled 248 exabytes, up 22% from a year ago. Revenue per terabyte rose 28%.
Nearline drives made up 90% of the total, at 223 exabytes. The 40TB ePMR platform should reach 30% of nearline shipments in December and 50% in the March quarter.
HAMR qualifications with two hyperscalers are on track to finish in the first quarter of calendar 2027. Volume shipments should follow in the first half of the year.
Why Investors Stayed Cautious
Earlier this month, Nikkei reported that Toshiba plans to double its capacity for AI data center drives in fiscal 2027. That report hit the stock, and it still seems to hang over it.
CEO Irving Tan said he sees no change in long-term industry fundamentals. He added that the company will focus on more advanced drives instead of more units.
Memory chip supply is also tight, and the drives use some of that content. Tan warned that cost per terabyte may fall more slowly in the near term, though the company still expects a 10% cut for the year.
Seagate (STX) fell 8% on Thursday as well. Western Digital trades at a P/E ratio of 14.6.
Evercore ISI reiterated its Outperform rating and $575 price target on Friday. InvestingPro says six analysts have recently raised their earnings estimates.
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