Story Stocks^®

Western Digital (WDC +8%) is making a nice move higher today after reporting its Q4 (Jun) results last night. The data storage giant reported nice EPS upside, marking its second consecutive quarter of a double-digit EPS beat under its new look and leadership. Recall that WDC recently hired Irving Tan as new CEO. Revenue grew 30% yr/yr to $2.61 bln, which was also well above expectations. Just as encouraging, the midpoint of Q1 (Sep) EPS guidance was above analyst estimates, with revenue also a good bit above expectations. On a final note, management noted that demand continues to strengthen, thanks to the emergence of agentic AI.

• WDC stated that the emergence of agentic AI at scale in multiple industries is creating an increasing need for data storage. Within its own engineering organization, it is already realizing tangible benefits of agentic AI to help accelerate its product development cycle.
• In addition, the rise of AI is accelerating its platforms business, as it is gaining traction with infrastructure providers as well as the growing number of native AI companies that don't have their own storage infrastructure.
• With that as a backdrop, demand for its products continues to strengthen. Shipments of its ePMR drives and UltraSMR more than doubled sequentially, exceeding 1.7 mln units. This marks one of the shortest qualifications and ramp cycles in WDC's history.
• There was also positive commentary regarding its next generation HAMR drives. Its next and final generation of ePMR drives will complete qualification in 1HCY26, which paves the way for a smooth transition to HAMR. Feedback on HAMR from two of its hyperscale customers continues to be encouraging and will transition from testing to qualification stage, staying ahead of internal milestones and on track for a ramp in 1HCY27.
• Recall that WDC previously mentioned some potential uncertainty on enterprise demand due to tariffs. Throughout the quarter, WDC did not see any of the risks materialize. Furthermore, the potential softness in enterprise would be picked up in the cloud, as enterprises move from cap-ex to consumption-based models. Cloud, again, was another bright spot, representing 90% of total revenue and growing 36% yr/yr.

Overall, it was another strong quarter for WDC, the new CEO seems to have found his footing. Investors are pleased to see continued strength with upside Q1 guidance and the bullish commentary regarding demand for its data products. Another welcome sight to investors was the progress on its HAMR drives, with WDC ahead of internal milestones. On a final note, these results have pushed the stock to a new 5-year high and continues to extend its gains, more than doubling its price since early April.