Western Digital Corporation (WDC.US) Q1 revenue surged 55% year-over-year, with both results and guidance exceeding expectations.

Western Digital Corporation (WDC.US) reported its fiscal 2027 first-quarter results on Thursday. Although the company delivered strong results and issued guidance for the next quarter above market expectations, its stock staged a spike-and-reverse in after-hours trading, at one point swinging from a gain of more than 2% to a decline of about 7%, drawing market attention. The report showed that in the first fiscal quarter ended October 2, 2026, Western Digital Corporation's revenue reached $4.381 billion, up 55% year-over-year and up 17% quarter-over-quarter; GAAP net income was $1.779 billion, up about 50% year-over-year; GAAP diluted earnings per share were $4.63, up 51% year-over-year. Non-GAAP adjusted net income was $1.779 billion, up 172% year-over-year; adjusted earnings per share were $4.64, up 161% year-over-year, compared with $1.78 in the prior-year period. Analysts had previously expected Western Digital Corporation's first-quarter revenue to be about $4.15 billion and adjusted earnings per share to be about $4.10. Both metrics reported by the company exceeded market expectations. In terms of profitability, Western Digital Corporation's first-quarter GAAP gross margin reached 57.8%, up 14.3 percentage points year-over-year and up 3.7 percentage points quarter-over-quarter; non-GAAP adjusted gross margin was 58.1%, up 14.2 percentage points year-over-year. The company's GAAP operating income for the quarter reached $2.046 billion, up 158% year-over-year, with operating margin rising from 28.1% in the prior-year period to 46.7%. Non-GAAP adjusted operating income reached $2.153 billion, up 152% year-over-year, and adjusted operating margin reached 49.1%, a substantial improvement from 30.4% in the prior-year period. Western Digital Corporation said strong customer demand, growth in storage capacity shipments, and improved product pricing together drove the quarter's performance growth. As demand for data storage from artificial intelligence applications and cloud computing infrastructure continues to expand, the company is seizing market growth opportunities through technology upgrades and deeper customer collaboration. In terms of cash flow, the company's first-quarter operating cash flow reached $1.604 billion, up from $672 million in the prior-year period; free cash flow was $1.377 billion, up from $599 million in the prior-year period. In addition, the company spent about $1 billion repurchasing common stock during the quarter. Looking ahead to the second quarter of fiscal 2027, Western Digital Corporation expects revenue of $5.0 billion to $5.2 billion, with a midpoint of $5.1 billion, implying year-over-year growth of about 66% to 72%; non-GAAP gross margin is expected to be 60% to 61%, and adjusted earnings per share are expected to be $5.60 to $6.00. This guidance is also above prior market expectations. Analysts noted that the market had originally expected Western Digital Corporation's second-quarter revenue to be about $4.57 billion and adjusted earnings per share to be about $4.82. Western Digital Corporation also announced it will raise its quarterly cash dividend by 17% to $0.175 per share.