Key Highlights
- Shares of WDC climbed 5.9% to $467.46, supported by a memory sector rally and continued optimism around AI infrastructure investment.
- The company exceeded quarterly expectations with EPS of $3.56 and $3.75 billion in revenue, surpassing Wall Street forecasts.
- Forward guidance for Q1 2027 points to EPS between $3.85 and $4.15, with anticipated revenue of approximately $4.1 billion.
- Wall Street maintains a “Moderate Buy” rating with a consensus price target of $534.56.
- Insider activity included CEO Irving Tan’s sale of $8.9 million worth of shares in August, part of more than $10 million in executive sales last quarter.
Shares of Western Digital (WDC) surged 5.9% on Friday, reaching an intraday peak of $468.19 before closing at $467.46. This marked a solid gain from the prior session’s close of $441.57.
Western Digital Corporation, WDC
The advance was part of a broader upswing in memory and storage equities, with SK Hynix rising 7% and Seagate posting a 5% gain. Market participants are increasingly confident that sustained AI infrastructure investments will bolster pricing power and profitability throughout the industry.
Over the last half-year, WDC has appreciated roughly 70%, though the stock remains considerably below its 52-week peak of $799.87 achieved in June.
Quarterly Results Exceed Expectations
Western Digital unveiled its fiscal Q4 earnings on August 5th, delivering results that surpassed analyst projections on both revenue and profit metrics. Earnings per share reached $3.56, eclipsing the consensus forecast of $3.31. Revenue totaled $3.75 billion compared to expectations of $3.70 billion, representing a 44% year-over-year increase.
Cloud-related sales dominated the quarter, comprising approximately 89% of total revenue at $3.3 billionāa 43% annual jump. The company experienced especially robust demand for high-capacity nearline hard drives deployed in data center environments.
Non-GAAP gross margin improved to 54.4%, while operating margin advanced to 44.2%. Return on equity registered at 48.15%.
Looking ahead to Q1 2027, executives project revenue near $4.1 billion with EPS ranging from $3.85 to $4.15. Non-GAAP gross margin is forecast between 55% and 56%.
Pricing Dynamics and Operational Efficiency
Price per terabyte increased in the high-teen percentage range year over year, underpinned by long-term supply agreements extending through 2029 to 2031. Simultaneously, cost per terabyte declined approximately 8% during the quarter, with management targeting a sustained 10% annual cost reduction trajectory.
WDC is scaling production of its next-generation ePMR drives offering capacities reaching 40TB, and anticipates that UltraSMR technology will represent roughly 60% of nearline shipments by fiscal year 2027.
During fiscal 2026, the company distributed $3.1 billion to shareholders through $1 billion in stock repurchases and $54 million in quarterly dividends. The balance sheet concluded the year with approximately $500 million in net cash.
Analyst sentiment leans toward a “Moderate Buy” consensus. Price targets exhibit considerable variance, with Cantor Fitzgerald projecting $900, JPMorgan forecasting $650, and Susquehanna estimating $500. The average target stands at $534.56.
On the insider front, CEO Irving Tan divested 20,000 shares on August 11th for approximately $8.9 million. Combined insider transactions during the previous quarter exceeded $10.4 million. All sales were conducted under predetermined Rule 10b5-1 trading arrangements.
Technical indicators show the 50-day moving average at $508.41 and the 200-day at $445.56. The stock currently trades at 7.52 times forward sales, exceeding the industry median of 3.05.
Zacks recently raised its fiscal 2027 EPS projection by 7.5% to $20.03 and lifted its fiscal 2028 estimate by 7.6% to $34.74 over the preceding 60 days.
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