Western Digital Corp (NASDAQ:WDC) Surges on Strong Q1 FY26 Earnings Beat and Robust Guidance

Western Digital Corp (NASDAQ:WDC) reported fiscal first-quarter 2026 financial results that significantly surpassed analyst expectations, driven by robust demand for data storage, particularly from cloud and AI infrastructure. The company's performance and optimistic outlook for the current quarter prompted a substantial positive reaction in after-hours trading.

Earnings and Revenue Versus Estimates

The company delivered a strong outperformance relative to Wall Street forecasts for the quarter ended October 3, 2025. Both the top and bottom-line results came in well ahead of consensus estimates.

• Non-GAAP Earnings Per Share (EPS): Reported $1.78, beating the analyst estimate of $1.60.
• Revenue: Reported $2.818 billion, exceeding the estimated $2.753 billion.

This represents a continuation of strong year-over-year growth, with revenue increasing 27% compared to the $2.212 billion reported in the first quarter of fiscal 2025.

Market Reaction

The market responded favorably to the earnings beat and the company's forward guidance. Following the release, Western Digital's stock saw a significant uptick in after-market trading, rising approximately 11.9%. This positive price action indicates investor confidence in the company's current trajectory and its ability to capitalize on growing demand in its key markets.

Management Commentary and Outlook

CEO Irving Tan attributed the strong results to execution in a "strong demand environment driven by growth of data storage in the cloud." He also highlighted the role of AI in accelerating data creation, positioning the company to capture new opportunities. In a show of confidence, the Board of Directors increased the quarterly cash dividend by 25% to $0.125 per share.

For the fiscal second quarter of 2026, Chief Financial Officer Kris Sennesael provided an outlook that meets or exceeds current analyst expectations.

• Q2 FY26 Revenue Guidance: $2.9 billion, plus or minus $100 million. This aligns with the analyst sales estimate of $2.846 billion for the quarter.
• Q2 FY26 Non-GAAP EPS Guidance: $1.88, plus or minus $0.15. This surpasses the current analyst EPS estimate of $1.72 for the next quarter.

Press Release Summary

The earnings report highlighted several key financial achievements and strategic developments:

• Profitability Expansion: The company demonstrated improved margins, with non-GAAP gross margin reaching 43.9%, up 260 basis points from the previous quarter. Non-GAAP operating margin also expanded to 30.4%.
• Strong Profit Growth: Non-GAAP operating income grew 17% quarter-over-quarter to $856 million, while non-GAAP net income attributable to common shareholders reached $655 million.
• Capital Return: The 25% dividend increase signals a commitment to returning capital to shareholders, reflecting strong free cash flow generation.
• Post-Separation Focus: The financial results are presented following the completion of the separation of its Flash business into Sandisk Corporation in February 2025, allowing the market to assess Western Digital's performance as a standalone HDD-focused company.

For a detailed look at historical earnings, future estimates, and analyst projections for Western Digital, you can review the data here.

Disclaimer: This article is for informational purposes only and is not intended as investment advice. The author has no position in any stock mentioned. All investments involve risk, and you should conduct your own research before making any investment decisions.