Western Digital Q1 2027: Margin Surge and Raised Dividend Signal a New Earnings Level
As seen on the 24/7 Wall St. homepage on October 22, 2026.
AI storage demand pushed non-GAAP gross margin to 58.1% from 43.9% a year ago, the kind of expansion that resets what this business can earn. Management's guidance and a dividend raised to $0.175 a share answer the recent selloff directly.
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Western Digital's fiscal first quarter of 2027 marks a sixth straight quarter of adjusted EPS exceeding expectations, with $4.64 against a $4.08 consensus estimate on revenue that also came in above estimates.
Non-GAAP gross margin reached 58.1%, up from 43.9% a year ago, and that expansion signals improved pricing and strong exabyte demand are structurally resetting what the business can earn at any given revenue level.
Free cash flow more than doubled to $1.38 billion, giving management room to act on two fronts at once. The company repurchased common stock during the quarter and raised its quarterly cash dividend 17%, a direct answer to the selloff that preceded the report.
CEO Irving Tan pointed to 161% year-over-year growth in non-GAAP EPS as evidence that disciplined execution is compounding the demand tailwind. His language around broadening the customer base and extending demand visibility suggests management sees the current environment as durable.
For fiscal Q2 2027, Western Digital guided non-GAAP gross margin to 60% to 61%, a sequential step-up from already elevated Q1 levels that investors will be measuring every subsequent quarter against.
Mentioned: WDC