Western Digital reported fiscal first-quarter revenue of $4.38 billion on October 22, 2026, marking a 55% year-over-year surge driven by cloud and artificial intelligence storage demand. Despite beating Wall Street expectations and raising its quarterly dividend, the company’s shares slipped in extended trading.
The San Jose, California-based manufacturer reported fiscal first-quarter earnings of $4.64 per share for the period ended October 2, 2026, marking a 160% increase from the prior year and surpassing analyst consensus estimates. Total revenue reached $4.38 billion, exceeding Wall Street projections of $4.1 billion.
The strong performance stemmed from a combination of higher shipment volumes and rising prices for stored data.
Western Digital took in 28% more on average for each terabyte of storage it shipped compared to the previous year.
Average sales per terabyte climbed to $17.67, according to calculations from company disclosures.
The company posted an operating income of $2.2 billion, up 152% year-over-year, alongside an operating margin of 49.1%. Gross margin expanded to 58.1%, rising 1,420 basis points compared to the same period a year earlier. Operating results showed a GAAP profit of $1.8 billion, which climbed 50.5% over the year, even as profit declined 44% compared to the prior quarter’s $3.2 billion profit.
Storage Demand Expands Into AI Labs
Demand for massive hard disk drives remains intense as data center operators build out infrastructure for artificial intelligence training and workloads. Chief Executive Irving Tan told analysts that storage requirements are broadening past traditional cloud providers.
We are increasingly seeing storage demand grow beyond our core cloud and hyperscale customers into enterprise environments and into newer end markets such as neocloud and AI frontier labs.
Irving Tan, CEO
Cloud revenue accounted for 88% of total quarterly revenue. Client drives contributed 7% of revenue, up 119% year-over-year, and consumer disks accounting for 5%. Total exabyte shipments hit 248 exabytes, representing a 21.6% increase from a year earlier and an 8% rise sequentially compared to 231 exabytes in the previous quarter.
Next-Generation Platforms and Magnetic Recording Technology Drive Growth
To sustain growth, management outlined product roadmaps centered on next-generation platforms. Executives expect this platform to account for about 30% of nearline shipments in the second fiscal quarter and 50% in the third fiscal quarter of 2027.
Simultaneously, heat-assisted magnetic recording technology qualifications are progressing toward volume shipments in the first half of calendar year 2027. First-generation heat-assisted magnetic recording product qualifications are underway with two hyperskilled customers during the first quarter. CFO Kris Sennesael emphasized that capital expenditure increases are intentionally directed toward head and media technology and factory automation rather than expanding unit capacity.
The CapEx is going to head and media and factory automation and not to expanding our unit capacity.
Kris Sennesael, CFO
Capital expenditures are expected to run modestly above the company’s five-year target range of 4% to 6% of revenue for the next two years. During the quarter, the company directed free cash flow toward returning capital, executing $1.0 billion in share buybacks, paying $570 million to settle convertible notes, and funding employee stock plans.
Western Digital Raises Revenue Guidance and Quarterly Dividend
Western Digital issued fiscal second-quarter revenue guidance centered at $5.1 billion, plus or minus $100 million, implying 69% year-over-year growth at the midpoint and above the $4.57 billion analysts anticipated. Adjusted earnings per share for the upcoming quarter are projected at $5.80, plus or minus 20 cents, based on a non-GAAP diluted share count of 380 million shares. Non-GAAP gross margin is expected to climb between 60% and 61%.
Supported by free cash flow generation, the board approved a 17% increase in the quarterly cash dividend, raising it to $0.175 per share. Despite the blowout figures and higher guidance, Western Digital shares fell 6.49% in after-hours trading to $331.19, caught in a market pullback affecting artificial intelligence and semiconductor stocks.
