Western Digital Corp (NASDAQ:WDC) shares fell 11% Thursday after the data storage company reported fiscal fourth quarter results that beat Wall Street estimates, but its margin outlook fell short of the elevated expectations set by rival Seagate.
Western Digital expects fiscal first quarter 2027 non-GAAP gross margin of 55% to 56%, with a midpoint of 55.5%, compared with 54.4% in the fourth quarter
The outlook points to further sequential margin expansion, but the pace of improvement was viewed against particularly high expectations for the storage sector. The company expects first quarter revenue of $4.1 billion, plus or minus $100 million, representing year-over-year growth of 42% to 49%. Adjusted earnings per share are expected at $4, plus or minus $0.15.
For the fiscal fourth quarter, Western Digital reported adjusted earnings of $3.56 per share on revenue of $3.75 billion, beating Wall Street estimates of about $3.33 per share and $3.69 billion in revenue. Revenue increased 44% year over year and 12% sequentially. “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,” Western Digital CEO Irving Tan said. “These results reflect our ability to scale innovation and operational excellence across our global organization, supporting our customers’ growing storage demand.” Western Digital CFO Kris Sennesael said fiscal 2026 was characterized by broadening demand, deeper customer engagement and disciplined execution across all end markets. “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,” Sennesael said