Western Digital Q4 FY26: $3.75B Revenue Beat, Stock Still Sinks 10% After Hours
Western Digital beat Wall Street’s revenue and profit targets for its fiscal fourth quarter on Wednesday, yet WDC shares still slid roughly 10% in after-hours trading as investors balked at guidance for the current quarter. Western Digital Corporation today reported fiscal fourth quarter and fiscal year 2026 financial results for the period ended July 3, 2026. The pure-play hard-drive maker’s numbers were strong across the board, but the market reaction shows just how high the bar has been set for the AI-storage darling.
Revenue Jumps 44% to $3.75 Billion, EPS More Than Doubles
Revenue of $3.75 billion represented 44% year-over-year growth and 12% sequential improvement, landing at the high end of the company’s guidance range. That topped the roughly $3.70 billion Wall Street was expecting, according to multiple earnings trackers. On the bottom line, Western Digital reported fiscal fourth-quarter non-GAAP earnings of $3.56 per diluted share, up from $1.70 a year earlier and ahead of the $3.3 expected by analysts, according to fiscal.ai data cited by Stocktwits.
Profitability improved just as sharply as the top line. Non-GAAP gross margin reached 54.4%, expanding by 1,310 basis points year-over-year and 390 basis points sequentially. On a GAAP basis, the company posted a GAAP gross margin of 54.1% with a notable net income attributable to common shareholders of $3.19 billion, resulting in a GAAP diluted EPS of $8.21, which more than doubled from the prior year.
Shares Fall Despite the Beat as Investors Digest FY27 Guidance
Despite the clean beat, WDC stock didn’t cooperate. Western Digital Corp. (WDC) shares tumbled nearly 11% in after-hours trading on Wednesday despite the hard-drive maker reporting quarterly earnings and revenue that topped Wall Street estimates. The stock had already weakened during the regular session, with shares closing the regular session at $519.17 (down 5.36%) before dropping another 11.12% to $461.42 after hours.
The selloff wasn’t about the quarter that just closed — it was about what comes next. For the first quarter of fiscal 2027, Western Digital forecast revenue of $4.1 billion, plus or minus $100 million, and adjusted earnings per share of $3.85 to $4.15. Analysts were expecting adjusted earnings of $3.76 per share on revenue of $4.04 billion. Technically a beat on paper, but while the company beat quarterly estimates, investors appeared underwhelmed by guidance that was only modestly above consensus.
Retail sentiment reflected the confusion. Stocktwits retail traders said the earnings beat did not warrant such a sharp selloff. One trader on the platform described the reaction as driven by “technicals and algos,” adding that “a 10% is ridiculous” given the underlying numbers. The move looks even starker against the stock’s recent run: the stock is declining on the latest print following a massive rally that sent the share price up 585% over the past 12 months.
CEO Irving Tan Points to “Durability of Demand” Heading Into FY27
Western Digital’s leadership framed the quarter as validation of its shift into a hard disk drive specialist chasing AI and cloud storage demand. CEO Irving Tan said in the earnings release: “WD concluded fiscal year 2026 with strong performance. In our fiscal fourth quarter, revenue increased 44% year over year, gross and operating margins expanded, and earnings per share more than doubled. These results reflect our ability to scale innovation and operational excellence across our global organization, supporting our customers’ growing storage demand.”
Looking ahead, Tan added that “as global data creation continues to accelerate, we enter fiscal year 2027 with continued confidence in the durability of demand and with increasing visibility into our business. With our scale, technology leadership, and operational discipline, WD is well positioned to capitalize on the secular data growth opportunity and deliver long-term shareholder value.” CFO Kris Sennesael echoed that tone, noting that “fiscal 2026 was an outstanding year for WD, characterized by broadening demand, deeper customer engagement, and disciplined execution across all end markets,” and that “as the cloud and other data-intensive workloads continue to expand, we remain confident in the long-term growth trajectory of our business, further margin expansion, and strong free cash flow generation.”
SanDisk Split and the Seagate Rivalry Fuel the AI-Storage Story
The results cap a transformational stretch for the company. The presentation highlighted a transformational year for Western Digital following its evolution into a pure-play hard disk drive company after the SanDisk separation on February 21, 2025. Since then, WD has leaned almost entirely into supplying hyperscalers and cloud providers building out AI infrastructure, a bet that has paid off financially even if Wednesday’s stock reaction suggests investors now expect near-flawless execution every quarter.
WD isn’t alone in riding that wave. Rival Seagate has posted comparable growth as the two effectively split the global nearline hard-drive market, and along with new advances in hyperscaler AI infrastructure, the same conclusion was reached by both CEOs: AI-driven data growth is accelerating faster than many investors anticipated. Also declared alongside the results was a $0.15 dividend payable Sept. 17 to shareholders of record.
Why Gamers Should Still Care About a Hard-Drive Maker’s Earnings
While WD’s fortunes are now overwhelmingly tied to data-center contracts rather than PC gaming rigs, the company still runs the WD_BLACK line of gaming HDDs and SSDs sold directly for PS5 and Xbox consoles, including officially licensed PS5 expansion drives. A hard-drive maker this deeply committed to AI infrastructure investment is also a company with the capital and manufacturing scale to keep pushing consumer gaming-storage prices and capacities forward, even as its balance sheet increasingly leans on hyperscaler cloud deals rather than console peripherals.
Read also: SanDisk Q4 FY26: $8.97B Revenue, $39.25 EPS Beat Fueled by AI Storage Demand
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