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Western Digital Corporation (WDC) reported first-quarter fiscal 2026 non-GAAP earnings of $1.78 per share, which surpassed the Zacks Consensus Estimate by 12%. The company reported earnings of 75 cents per share in the prior-year quarter. Management anticipated fiscal first-quarter non-GAAP earnings per share to be $1.54 (+/- 15 cents).
Quarterly revenues of $2.82 billion surged 27% year over year, surpassing the Zacks Consensus Estimate of $2.72 billion. Western Digital’s continued focus on innovation and operational discipline positions the company well to capitalize on new growth opportunities as the AI revolution drives massive increases in data creation and storage demand.
Its storage portfolio, spanning from data centers to edge devices, continues to evolve in sync with the needs of AI-driven data growth. This strategic alignment is allowing the company to sustain revenue momentum amid a competitive landscape. WDC shipped a total of 204 exabytes to customers during the quarter, marking a 23% year-over-year increase. This included 2.2 million units of its latest-generation ePMR drives, featuring capacities of up to 26TB for CMR and 32TB for UltraSMR models.
It will begin qualifying its next-generation ePMR drives in early 2026, extending its proven, scalable technology. Combined with HAMR, these advancements will deliver higher-capacity drives to meet rising cloud and AI data demands. For the fiscal second quarter, WDC expects continued revenue growth fueled by strong data center demand and improved profitability from increased adoption of higher-capacity drives.
Western Digital Corporation price-consensus-eps-surprise-chart | Western Digital Corporation Quote
Driven by business momentum and financial stability, Western Digital’s board of directors approved a 25% increase in its quarterly cash dividend, raising it from 10 cents to 12.5 cents per share. The dividend will be paid on Dec. 18 to stockholders on record as of Dec. 4, 2025.
Western Digital delivered performance that not only beat internal expectations but also boosted investor confidence. Shares of WDC jumped 12.5% in pre-market trading today. In the past year, shares have gained 109.7% compared with the Zacks Computer-Storage Devices industry’s rise of 64%.
Revenues from the Cloud end market (89% of total revenues) climbed 31% year over year to $2.5 billion, driven by strong demand for higher-capacity nearline products.
Revenues from the Client end market (5%) were up 5% year over year to $146 million.
Revenues from the Consumer end market (6%) were down 1% year over year to $162 million.
WDC reported a non-GAAP gross margin of 43.9%, up 660 basis points (bps) year over year and 260 bps sequentially, above its guidance (41-42%). The improvement was supported by a steady transition to higher-capacity drives and rigorous cost management across production facilities and the supply chain.
Non-GAAP operating expenses decreased 9% year over year to $381 million, but were slightly above guidance ($370-$380 million), mainly due to higher variable compensation from better-than-expected performance.
Non-GAAP operating income totaled $856 million, up 110% year over year, with margins expanding more than 1,200 bps to 30.4%.
As of Oct. 3, 2025, cash and cash equivalents were $2 billion compared with $2.1 billion reported as of June 27, 2025.
Long-term debt (including the current portion) was $4.7 billion as of Oct. 3, 2025, the same as the end of the prior quarter.
Western Digital generated $672 million in cash from operations compared with $34 million in the prior-year quarter. Free cash flow amounted to $599 million in the quarter under review.
During the quarter, WDC repurchased approximately 6.4 million shares for $553 million and paid $39 million in dividends. Since launching the capital return program in fourth-quarter fiscal 2025, the company has returned a total of $785 million to shareholders through buybacks and dividends.
At the mid-point of its guidance, Western Digital anticipates non-GAAP revenues of $2.9 billion (+/- $100 million), up 20% year over year. The Zacks Consensus Estimate is currently pegged at $2.79 billion.
Management projects non-GAAP earnings of $1.88 (+/- 15 cents). The Zacks Consensus Estimate is currently pegged at $1.70.
WDC expects non-GAAP gross margin in the range of 44-45%. Non-GAAP operating expenses are expected to decline sequentially between $365 million and $375 million.
This guidance reflects the company’s continued optimism about the demand trajectory for high-capacity storage, especially within data centers. The improving margin outlook also highlights Western Digital’s focus on cost efficiency, product mix optimization and strong pricing discipline.
Currently, Western Digital sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here
Seagate Technology Holdings plc (STX) reported first-quarter fiscal 2026 non-GAAP earnings of $2.61 per share, beating the Zacks Consensus Estimate by 10.6% and exceeding the high end of management’s guidance of $2.3 per share (+/- 20 cents). Non-GAAP revenues of $2.63 billion exceeded the Zacks Consensus Estimate by 3.9%. Revenues were above the guidance midpoint, increasing 21% year over year. The rising demand for high-capacity hard drives contributed to this growth. Global cloud service providers primarily fueled demand, with notable sequential revenue increases from enterprise customers.
International Business Machines Corporation (IBM) reported strong third-quarter 2025 results, with adjusted earnings and revenues beating the respective Zacks Consensus Estimate. Excluding non-recurring items, non-GAAP net income from continuing operations was $2.65 per share compared with $2.30 in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 21 cents. Quarterly total revenues increased to $16.33 billion from $14.97 billion on strong demand for hybrid cloud and AI, driving growth in the Software segment. On a constant currency basis, revenues were up 7% year over year. The top line exceeded the consensus estimate of $16.1 billion.
Cadence Design Systems (CDNS) reported third-quarter 2025 non-GAAP earnings per share (EPS) of $1.93, which beat the Zacks Consensus Estimate by 7.8%. The bottom line increased 17.7% year over year, exceeding management’s guided range of $1.75-$1.81. Revenues of $1.339 billion beat the Zacks Consensus Estimate by 0.9% and increased 10.2% year over year. The figure also beat the management’s guided range of $1.305-$1.335 billion. The top line was driven by broad-based demand for its solutions, especially the AI-driven portfolio, amid robust design activity.
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This article originally published on Zacks Investment Research (zacks.com).
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