Strong Earnings Performance#
Western Digital Corporation has reported impressive financial results for its fiscal third quarter of 2026, significantly exceeding earnings expectations. The company achieved an earnings per share (EPS) of $2.72, surpassing the forecasted $2.36 by 15.25%. Additionally, revenue reached $3.34 billion, which was above the anticipated $3.23 billion. Following this announcement, the stock rose 4.55% in after-hours trading and continued to climb, reaching $455, marking a total increase of 6.98% from the previous close.
Key Financial Highlights#
The strong performance in Q3 FY2026 was driven by a remarkable 45% year-over-year revenue increase, largely attributed to a 48% surge in the cloud storage segment. This segment now accounts for 89% of Western Digital's total revenue. Other financial highlights include: - Revenue: $3.34 billion, up 45% year-over-year. - Earnings per share: $2.72, up 97% year-over-year. - Gross margin: 50.5%, an improvement of 1,040 basis points year-over-year. - Operating income: $1.3 billion, up 116% year-over-year. - Free cash flow: $978 million, representing a 29% margin.
Market Reaction#
After the earnings release, Western Digital's stock experienced a notable rise, reflecting investor confidence in the company's robust financial performance and future prospects. The stock has surged an extraordinary 887% over the past year and is currently trading near its 52-week high. However, it is noted that the stock is trading slightly above its Fair Value, which may be a consideration for potential investors.
Outlook for Q4 FY2026#
Looking ahead, Western Digital expects revenue for Q4 FY2026 to be around $3.65 billion, indicating a projected 40% year-over-year growth at the midpoint. The company also anticipates a gross margin between 51% and 52%, with an EPS estimate of $3.25 ± $0.15. This guidance suggests continued growth as the company capitalizes on the increasing demand for data storage solutions.