Key Takeaways
- Shares of WDC jumped 5.9% to $467.46, fueled by a sector-wide memory rally and growing enthusiasm for AI-driven data center investments.
- The storage giant exceeded quarterly expectations, delivering $3.56 in earnings per share and $3.75 billion in sales, surpassing Wall Street forecasts.
- Guidance for the first quarter of fiscal 2027 points to EPS between $3.85 and $4.15, with anticipated revenue of roughly $4.1 billion.
- Wall Street maintains a “Moderate Buy” rating on the stock, with a mean price target of $534.56.
- CEO Irving Tan offloaded $8.9 million worth of shares in August, part of broader insider selling totaling more than $10 million last quarter.
Shares of Western Digital (WDC) surged 5.9% during Friday’s session, reaching an intraday peak of $468.19 before closing at $467.46. This represents a notable jump from the prior day’s close of $441.57.
Western Digital Corporation, WDC
The uptick coincided with broader strength across memory and storage equities, as SK Hynix climbed 7% and Seagate advanced 5%. Market participants are increasingly confident that artificial intelligence infrastructure investments will sustain favorable pricing dynamics and profit growth throughout the industry.
Over the last half-year, WDC has appreciated approximately 70%, although it still trades significantly below its 52-week peak of $799.87, which was achieved in June.
Impressive Quarterly Results Support Bullish Sentiment
Western Digital unveiled its fiscal fourth-quarter earnings on August 5th, exceeding projections across key metrics. The company delivered earnings of $3.56 per share, beating the analyst consensus of $3.31. Total revenue reached $3.75 billion against expectations of $3.70 billion, marking a 44% year-over-year increase.
Cloud-related sales dominated the period, representing approximately 89% of overall revenue at $3.3 billion, a 43% annual gain. Particularly robust was demand for high-capacity nearline HDDs deployed in enterprise data centers.
Non-GAAP gross margin widened to 54.4%, while operating margin hit 44.2%. The company achieved a return on equity of 48.15%.
Looking ahead to Q1 fiscal 2027, management projects revenue near $4.1 billion alongside earnings per share ranging from $3.85 to $4.15. Non-GAAP gross margin is forecast at 55% to 56%.
Pricing Dynamics and Efficiency Gains in Focus
Pricing per terabyte increased in the high teens on a year-over-year basis, supported by multi-year customer contracts extending through 2029 to 2031. Simultaneously, cost per terabyte declined approximately 8% during the quarter, with the organization targeting an ongoing 10% annual cost reduction.
WDC is scaling up production of its next-generation ePMR drives featuring capacities up to 40TB and anticipates UltraSMR technology will comprise roughly 60% of nearline shipments by the end of fiscal 2027.
The firm distributed $3.1 billion to shareholders throughout fiscal 2026, encompassing $1 billion in share repurchases and $54 million in dividend payments during Q4 alone. The year concluded with approximately $500 million in net cash on the balance sheet.
Analyst sentiment currently reflects a “Moderate Buy” consensus. Price objectives vary considerably, spanning from Cantor Fitzgerald’s $900 target to JPMorgan’s $650 and Susquehanna’s $500. The average stands at $534.56.
On a more cautious note, CEO Irving Tan divested 20,000 shares on August 11th for approximately $8.9 million. Combined insider sales during the previous quarter exceeded $10.4 million. These transactions were conducted through pre-established Rule 10b5-1 trading plans.
The 50-day moving average currently rests at $508.41, while the 200-day stands at $445.56. The stock trades at 7.52 times forward sales, above the sector average of 3.05.
Zacks raised its fiscal 2027 EPS projection by 7.5% to $20.03 and boosted its fiscal 2028 forecast by 7.6% to $34.74 over the previous 60 days.
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