Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Western Digital's fiscal 2026 ended July 3, 2026 and included an extra week compared with the prior year, so year-over-year comparisons are modestly flattered. Management attributes the revenue growth to accelerating cloud HDD demand, with exabytes sold rising 25% and average selling prices per exabyte up 8% across all end markets. However, reported net income was dominated by a $6.5 billion mark-to-market gain on the retained Sandisk stake, so core HDD profitability is much lower than the headline net margin implies. Operating cash flow more than doubled to fund aggressive buybacks and debt reduction, but cash and equivalents declined as a result. The stronger operations rely on sustained cloud investment and continued pricing power in high-capacity drives.
Revenue
$12.92B
+35.70% YoY
EPS (Diluted)
$24.28
+374.22% YoY
Gross Margin
48.9%
+10.1 pts YoY
Operating Income
$4.45B
+90.79% YoY
Audit Opinion: Unqualified opinion — the consolidated financial statements present fairly, in all material respects, the financial position of Western Digital Corporation and subsidiaries as of July 3, 2026 and June 27, 2025, and the results of operations and cash flows for each of the fiscal years in the three-year period ended July 3, 2026, in conformity with U.S. GAAP; internal control over financial reporting was effective.(Report of Independent Registered Public Accounting Firm)
Source: SEC XBRL
Western Digital (WDC) reported FY2026 revenue of $12.92B, up 35.7% year over year. Operating margin was 34.5%, up 10.0 points from 24.5% a year earlier. Operating cash flow was $3.93B, up 132.3% year over year.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026 | 3.56 | 3.33 | Beat +7.0% |
| Mar 2026 | 2.72 | 2.41 | Beat +12.7% |
| Dec 2025 | 2.13 | 1.94 | Beat +10.0% |
| Sep 2025 | 1.78 | 1.60 | Beat +11.6% |
Compiled by AI from 10-K Item 7 of this filing
Fiscal 2026 ended July 3, 2026 and comprised 53 weeks, with the first quarter containing 14 weeks, while fiscal 2025 and 2024 were 52-week years; this extra week modestly affects year-over-year comparisons.
Source: 10-K Item 7 MD&A
Management attributes the increase in net revenue to a 25% rise in exabytes sold and an 8% improvement in average selling prices per exabyte, reflecting strong demand across all end markets, especially cloud.
Source: 10-K Item 7 MD&A
Net income includes a $6.5 billion mark-to-market gain on the retained Sandisk common stock, which was tax-free due to the Separation, and was partially offset by $545 million of debt-for-equity, $254 million of equity-for-equity, and $108 million of convertible note transaction costs.
Source: 10-K Item 7 MD&A
The company repurchased 14.7 million shares for $2.59 billion, paid $0.50 per share in dividends totaling $174 million, and used cash to repay $1.66 billion of other debt and settle $1.22 billion of convertible notes.
Source: 10-K Item 7 MD&A
Management expects capital expenditures to average 4% to 6% of net revenue over the next five years, with fiscal 2027 capex higher than 2026 as it invests in heads, media operations, and automation to increase productivity.
Source: 10-K Item 7 MD&A
Compiled by AI from 10-K Item 1A of this filing · 4 high, 1 medium, 0 low
Cloud accounted for 89% of net revenue and the top 10 customers 73%, with three customers each over 10%. Losing any of these customers, or reductions in their demand, could materially harm operating results.
Source: 10-K Item 1A Risk Factors
The company must successfully manage transitions such as HAMR areal-density technology, qualify products through lengthy customer testing, and ramp manufacturing yields. Failure could pressure gross margin, increase R&D, or reduce competitiveness.
Source: 10-K Item 1A Risk Factors
Many components and materials are available only from a limited number of suppliers, some sole-source, and the company has no guaranteed capacity. Supplier disruptions, trade restrictions, or consolidation could cause shortages or cost increases.
Source: 10-K Item 1A Risk Factors
The company has multi-quarter or multi-year commitments to sell agreed volumes at predetermined or formula-based prices. If market prices rise or more attractive opportunities emerge, these agreements could create significant opportunity costs or financial penalties if performance fails.
Source: 10-K Item 1A Risk Factors
Armed conflicts, tariffs, and China's export restrictions on rare earth minerals critical to HDD manufacturing could disrupt supply chains and raise costs. U.S. trade policy changes also create substantial market uncertainty.
Source: 10-K Item 1A Risk Factors
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 12.92 $B | 9.52 $B | +35.70% |
Cost of Revenue $B | 6.61 $B | 5.83 $B | +13.38% |
Gross Profit $B | 6.31 $B | 3.69 $B | +70.94% |
Operating Income $B | 4.45 $B | 2.33 $B | +90.79% |
Net Income $B | 9.42 $B | 1.89 $B | +398.89% |
EPS (Basic) $ | 26.92 $ | 5.31 $ | +406.97% |
EPS (Diluted) $ | 24.28 $ | 5.12 $ | +374.22% |
SG&A Expense $M | 551.00 $M | 568.00 $M | -2.99% |
Answers draw on this SEC filing and the data on this page
WDC reported a significant increase in net income and EPS for Q3 FY2026, driven by strong revenue growth and improved margins, despite a reduction in total assets and cash reserves.
WDC reported a significant increase in Q2 FY2026 net income and EPS, driven by strong revenue growth and improved margins.
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