Western Digital Corporation

Strong FY26 performance; demand remains “durable” and AI-driven - FY26 results: revenue +36% to $12.9B, gross margin 49.1% (+970 bps YoY), operating margin 37.3% (+1,290 bps), EPS $10.22 (more than doubled). - Cash/returns: Free cash flow (FCF) $3.5B (27% margin); returned $3.1B to shareholders (dividends + buybacks); net positive cash position ~$0.5B (ended Q4 with $1.6B cash, $1.1B debt). - Management’s thesis: storage demand is compounding as AI moves from training → inference → Agentic AI (persistent data generation) and expanding into physical AI (often requiring synthetic data too). They emphasize ~80% of hyperscale DC data still on HDDs, which should persist.

Q4 FY26 results beat expectations range; pricing and mix supported margin expansion - Q4: revenue $3.75B (+44% YoY); EPS $3.56 (+109% YoY); 231 exabytes shipped (+22% YoY). - Margins: gross margin 54.4% (+1,310 bps YoY); operating income $1.66B (+126% YoY); operating margin 44.2% (+1,610 bps). - Mix/pricing signals: blended average price per TB up high teens YoY (improved vs prior quarter high single digits). Gross margin helped by higher-capacity mix, pricing, and manufacturing execution.

FY27 Q1 guidance: continued strong growth and incremental margin performance (but only one quarter guided) - Forecast for Q1 FY27: - Revenue: $4.1B ± $100M (midpoint +45% YoY). - Gross margin: 55%–56%. - OpEx: $390M–$400M; tax rate 17%; interest/other $15M. - EPS: $4.00 ± $0.15 (non-GAAP share count ~388M). - Management framing: believe Q1 could be a low point for sequential growth/incrementals with acceleration through FY27 as 40TB ePMR ramp and later HAMR come through—though they reiterated they only guide one quarter at a time.