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We’ll be winding down this live blog. If you’re just joining us, you can scroll down to see updates we’ve provided.
The bottom line is Western Digital delivered excellent earnings tonight, but that was largely expected. Shares are up significantly this year and more than 480% across the past year.
That level of performance demand exceptional performance. So, Western Digital blew out earnings but it’s largely being met with a shrug.
Looking further out at earnings, SanDisk announced an even bigger blowout tonight. Storage of all kinds is seeing its biggest bull market ever. We hope you’ve enjoyed tonight’s earnings and return to 24/7 Wall St in the future!
Western Digital delivered a strong quarter with solid execution across key metrics, though the muted market reaction suggests investors had already priced in much of this strength after the stock’s 62% year-to-date surge.
| Category | Grade | Notes |
|---|---|---|
| Revenue Performance | A | Beat by $85M (2.9%) with 25% YoY growth demonstrating strong data center demand |
| Earnings Beat/Miss | A | EPS of $2.13 crushed estimates of $1.93 by 10.4%, up 78% YoY |
| Guidance Quality | A- | Q3 revenue guidance of $3.2B implies ~40% YoY growth, though margin guidance of 47.5% shows limited expansion |
| Margin Trends | B+ | Adjusted gross margin of 46.1% expanded 770 basis points YoY, but sequential improvement slowing |
| Cash Flow | A | Free cash flow of $653M surged 94% YoY; company returned over 100% to shareholders |
| Management Confidence | A- | CEO cited “disciplined execution” and “confidence” from customers, though avoided aggressive targets |
Here’s what Western Digital had to say about HAMR demand. As a reminder, its a key driver of future growth for the company:
“In addition, we continue to accelerate our HAMR innovation. To support this, we recently acquired intellectual property assets and talent that will help us in the development of our internal laser capabilities. Also this past quarter, in partnership with software ecosystem partners, we announced our UltraSMR enabled JBOD platforms, expanding UltraSMR adoption to a broader customer set.
These platforms deliver significantly higher storage density compared to conventional drives. Giving customers hyperscale-like performance and make mass scale data analysis more sustainable and efficient. We are truly seeing our approach to resonate with our customers, and this is reflected in longer-term agreements.
And better visibility into their requirements. We have firm purchase orders with our top 7 customers through calendar year 2026. We also have in place robust commercial agreements with 3 of our top 5 customers. Two, through calendar year 2027 and one through calendar year 2028. These agreements indicate the strong trust that we have built for our customers and confidence in our ability to meet their exabyte needs.”
We’ll post highlights from it shortly.
Western Digital delivered a solid beat on both metrics. The company reported adjusted EPS of $2.13, exceeding the consensus estimate of $1.93 by $0.20 (10.4%). Revenue came in at $3.02 billion, surpassing expectations of approximately $2.935 billion by $85 million (2.9%).
| Metric | Expected | Actual | Beat/Miss | % Diff |
|---|---|---|---|---|
| Adjusted EPS | $1.93 | $2.13 | Beat | +10.4% |
| Revenue | $2.935B | $3.02B | Beat | +2.9% |
Shares initially jumped 6% after hours before retreating to flat. The muted reaction likely reflects the stock’s strong recent performance, with investors potentially taking profits despite the beat.
Apple just announced earnings and is waiting for their conference call to give guidance on margins. That’s likely because they want to talk about pricing power for categories like memory and storage.
Western Digital shares were initially up big, around 6%.
However, they’ve now given up those gains and are trading flat.
You have to wonder if SanDisk’s earnings are ‘suckign the air out of the room.’ That is to say, Western Digital has run up substantially and its results are very impressive. However, they’re not nearly as impressive as what SanDisk just reported.
Western Digital had a massive beat on their guidance. We’ll have more updates shortly…
Shares are immediately jumping 6%. SanDisk also blew out earnings and is up 10%. Storage continues to go wild amid incredible pricing power and demand.
Here’s the key numbers:
As a reminder, here’s what Wall Street Expected
| Metric | Consensus Estimate | YoY Growth |
|---|---|---|
| Q2 FY2026 Adjusted EPS | $1.93 | +9% vs. Q2 FY2025 actual |
| Q2 FY2026 Revenue | ~$2.935B | -31.5% |
| Full Year FY2026 EPS | $7.90 | 60% |
WDC saw a small rally into the close, ending the day down about .4%.
We’ll begin updating this live blog with news and analysis once earnings hit. Once again, they’re expected at 4:05 p.m. ET.
Shares of Western Digital are down 1.6% as of 3:43 p.m. ET. That drop is interesting because Seagate (Nasdaq: STX) shares are up 1.25% while other storage plays like SanDisk have also risen today.
We expect Western Digital’s earnings to hit newswires at about 4:05 p.m. ET tonight and will begin posting analysis shortly after.
Live coverage has ended. The full story is below.
Western Digital (NASDAQ: WDC | WDC Price Prediction) reports fiscal second quarter 2026 results today after the bell. After a 111% earnings beat last quarter and a stock price that’s surged 490% over the past year, this report will test whether the storage recovery story still has legs.
Last quarter delivered the kind of beat that resets expectations. Western Digital reported $3.07 in adjusted EPS against a $1.45 estimate, nearly doubling consensus on the back of improving data center demand and better pricing. Adjusted earnings didn’t show quite as big a beat at $1.78, but that was still way ahead of analyst estimates of $1.58.
Revenue hit $2.82 billion, up 23% year-over-year, with gross margins expanding to 43.5%.
Since then, the stock has added another 62% year-to-date, closing at $279.70 and briefly touching an all-time high of $284. That’s a remarkable run for a company that was losing money just two years ago. The question now is whether fundamentals can support the valuation or if we’re pricing in perfection.
Competitor Seagate just posted a strong quarter with record results driven by AI data center demand and production ramps of HAMR-based storage products. Western Digital shares rallied 12% on that news, suggesting the market believes WDC is positioned similarly. The storage industry has consolidated to essentially three players, creating pricing power that didn’t exist during the brutal 2023-2024 downturn.
| Metric | Consensus Estimate | YoY Growth |
|---|---|---|
| Q2 FY2026 Adjusted EPS | $1.93 | +9% vs. Q2 FY2025 actual |
| Q2 FY2026 Revenue | ~$2.935B | -31.5% |
| Full Year FY2026 EPS | $7.90 | 60% |
| Full Year FY2026 Revenue | TBD | 25% |
As a reminder, Western Digital spun off SanDisk last February, so year-over-year earnings aren’t very helpful, especially on revenue.
I’ll be focused on three things: margins, inventory, and guidance tone.
Gross margins hit 43.9% last quarter, the highest in recent memory. That’s the real story here. Western Digital has pricing power again because the industry rationalized capacity and AI workloads need massive amounts of nearline storage. If margins hold or expand, that validates the thesis that this isn’t just a cyclical recovery but a structural improvement.
Inventory management will tell us about demand visibility. Western Digital worked down inventory from $3.7 billion in fiscal 2023 to $1.3 billion by mid-2025. That normalization drove significant cash flow improvement.
Management’s tone on AI infrastructure spending matters more than the quarterly print. Data center customers are making multi-year capacity commitments. If Western Digital can articulate how much of its backlog is tied to these longer-term contracts versus spot demand, that changes the risk profile entirely. Seagate’s management sounded confident about sustained AI-driven demand. Western Digital needs to match that conviction.
The HAMR technology discussion will also be critical. Heat-assisted magnetic recording allows higher storage densities, giving Western Digital a competitive advantage in nearline drives. Production ramp updates and customer adoption commentary will signal whether the company can maintain its technology lead.
Contact [email protected] for any questions or corrections.
Eric Bleeker has been investing for more than 20 years. He began his career working at Microsoft before joining Motley Fool, one of the largest publishers of financial research. In his 15 years at Motley Fool Eric served as the General Manager for Fool.com and led coverage in the Technology & Telecom sector. In addition, he was a featured columnist and has hosted dozens of investing seminars attended by more than a million total investors. Eric has more than 1,000 financial bylines to his name and has been featured in The Wall Street Journal, CNBC, Fox Business, and many other leading publications. He is currently focused on artificial intelligence investing and is a CFA Charterholoder.
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