Western Digital Corporation (WDC)
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Western Digital is now a pure-play hard-drive maker after the Sandisk spin-off — and one of the biggest winners of the AI data-center boom: revenue +45 percent, gross margin above 50 percent for the first time, debt cut from $4.75 billion to $1.6 billion. We read the annual report (10-K) and the quarterly reports (10-Q): of the $6.2 billion earned in the last nine months, $4.45 billion comes from the markup on the retained Sandisk stake, three customers supply 43 percent of revenue — and this same business was posting losses just two years ago. Not investment advice — just the reminder that even the best cycle of all time is still a cycle.
Basics
Performance
Valuation
Profitability
Balance Sheet & Safety
Growth
Quality & Screener
AI Rating
–Not yet rated — we only show a category once an SEC-backed file with at least two cited passages is available. How the Rating Is Built
Highlighted are things our editorial team noticed: green = stands out as strong, red = deserves a closer look. No single metric is a verdict on its own — always read it in context.
Quarterly Figures
| Quarter | EPS (Earnings Per Share) | EPS YoY (%) | Sales ($M) | Sales YoY (%) | Net Margin (%) | OCF ($M) | FCF ($M) |
|---|---|---|---|---|---|---|---|
| 2024: Q4 | 1.66 | – | 4,285 | 41.30 | 13.90 | 403 | 287 |
| 2025: Q1 | 1.46 | 286.10 | 2,294 | 30.90 | 22.80 | 508 | 379 |
| 2025: Q2 | 0.71 | 535.30 | 2,605 | 30.00 | 9.90 | 746 | 675 |
| 2025: Q3 | 3.14 | 127.60 | 2,818 | 27.40 | 41.90 | 672 | 599 |
| 2025: Q4 | 4.90 | 194.40 | 3,017 | -29.60 | 61.10 | 745 | 653 |
| 2026: Q1 | 8.52 | 482.40 | 3,337 | 45.50 | 96.00 | 1,123 | 978 |
- EPS (Earnings Per Share):
- Quarterly profit divided by the total share count — how much of the profit works out to a single share.
- YoY (Year over Year):
- Change versus the same quarter a year ago — this is how you compare without seasonal distortion (e.g. the holiday shopping season).
- Sales:
- All revenue for the quarter, before any costs are deducted — the top line of the income statement.
- Net Margin:
- What percentage of sales is left over as profit in the end. Negative means the company is posting a loss.
- OCF (Operating Cash Flow):
- The cash that actually flows into the till from the core business during the quarter — harder to dress up than book profit.
- FCF (Free Cash Flow):
- Operating cash flow minus capital expenditures — the money that's genuinely free to use, say for paying down debt, buybacks, or dividends.
Assessment: Opportunities & Risks
Revenue +45 percent, exabytes shipped +34 percent and price per exabyte +9 percent in the third quarter of fiscal year 2026; customers are committing earlier and for longer per the quarterly report (10-Q) — scarcity with pricing power in a three-supplier market.
Gross margin 50.2 percent (prior-year quarter: 39.8), operating margin 35.7 percent, $978 million of free cash flow in the quarter; guidance points to 51 to 52 percent adjusted gross margin for the final quarter of 2026.
Debt cut from $4.75 billion to $1.6 billion (mostly in exchange for Sandisk shares), $2.05 billion in cash, a $6 billion buyback program and a 20 percent dividend increase to $0.15 per quarter (June 2026).
The same hard-drive business lost a combined roughly $1.7 billion in fiscal years 2023 and 2024; the annual report (10-K) documents underutilization and falling prices as recently as 2024 — and even during the boom, $103 million in restructuring charges hit the books (9M FY 2026).
Cloud end market equals 89 percent of revenue, the top-10 customers 71 percent, three customers 43 percent (Q3 FY2026); this same hyperscaler buyer group collectively paused orders in 2023/2024 and triggered the loss years.
Price-to-sales around 21.6 and a reported P/E around 35 (data as of July 9, 2026), with 71 percent of the nine-month profit being a Sandisk paper gain (adjusted: $2.72 instead of $8.20 per share in Q3); the $37.72 convertible note keeps diluting, and insider filings (Form 4) show 19 sales versus 1 purchase.
Western Digital is the rare case where the boom story is fully backed by SEC filings: real AI demand, record margins, a repaired balance sheet, rising payouts. But the price paid for that assumes the best hard-drive cycle in years is a permanent state — while the reported profit is mostly a paper gain, three customers carry 43 percent of revenue, and insiders are mostly selling. Not investment advice.
- Fiscal-year quirk: a 52/53-week year ending on the Friday closest to June 30; "Q3 2026" means January through early April 2026, and fiscal year 2026 ends July 3, 2026 (53 weeks, with a 14-week Q1 — a small assist to nine-month growth).
- The Sandisk wind-down is nearly complete: as of April 3, 2026 Western Digital still held 1.7 million Sandisk shares (market value $1.19 billion) and swapped just over a million of them for its own shares in June 2026; mark-to-market effects can keep swinging reported earnings in either direction (FY 2025: minus $772 million, 9M FY 2026: plus $4.45 billion).
- From November 15, 2026, Western Digital can call the 2028 convertible note early; in June 2026 it already exchanged $858.4 million of face value for cash plus shares. Daily share-price swings of 6.8 percent (data as of July 9, 2026) — this is not a low-volatility name.
About the Company
Western Digital Corporation entwickelt, fertigt und verkauft Datenspeichergeräte und -lösungen auf Basis von Festplattentechnologie (HDD) in den USA, Asien, Europa, dem Nahen Osten und Afrika. Das Unternehmen bietet interne HDDs, Rechenzentrumslaufwerke und -plattformen sowie externe Laufwerke an.
| IPO Year | 1987 |
|---|---|
| Next Earnings | 29. Jul 2026 |
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Data as of: July 2, 2026 · Source: fundamental data & SEC filings (annual and quarterly reports, 10-K/10-Q)
Note: pure fact-based analysis, not investment advice and not a solicitation to buy or sell. All figures without guarantee.