Western Digital Boosts Fiscal 2027 Drive Ramp on AI Storage Demand

Western Digital reported fiscal 2026 fourth-quarter earnings that beat expectations and said its next test for fiscal 2027 is executing a product ramp to meet rising cloud and artificial intelligence storage demand.

Fourth-quarter revenues reached $3.75 billion, up 44% year over year and above the Zacks Consensus estimate of $3.70 billion, while non-GAAP earnings were $3.56 per share versus $3.35 expected, according to The Globe and Mail.

The company said non-GAAP gross margin rose 1,310 basis points year over year to 54.4%, supported by a richer mix of higher-capacity drives, favorable pricing, and manufacturing discipline, and blended price per terabyte increased in the high teens, The Globe and Mail reported.

For the first quarter of fiscal 2027, management projected revenues of $4.1 billion plus or minus $100 million, which implies about 45% year-over-year growth at the midpoint, according to The Globe and Mail.

Western Digital also forecast non-GAAP gross margin of 55%-56% and earnings of $4.00 per share plus or minus 15 cents, The Globe and Mail said.

Western Digital began shipping next-generation energy-assisted perpendicular magnetic recording drives with capacities up to 40 terabytes in fiscal 2026 fourth quarter and entered volume production with two customers, as reported by The Globe and Mail.

Management expects the 40TB ePMR platform to account for about half of nearline bits by the third quarter of fiscal 2027, The Globe and Mail reported.

The company’s roadmap calls for 44-terabyte heat-assisted magnetic recording products in the first half of calendar 2027 and 50-terabyte products in the second half, with customer qualification and manufacturing execution central to fiscal 2027, according to The Globe and Mail.

UltraSMR adoption is expected to reach about 60% of nearline exabyte shipments by the end of fiscal 2027, The Globe and Mail said, with sequencing across multiple product transitions important for capacity and cost gains.

AI Storage Demand and Broader Market Context

Western Digital said inference, agentic artificial intelligence, and physical artificial intelligence are persistent storage drivers because these workloads continuously create and retain data, according to The Globe and Mail.

The company also reported that high-bandwidth drives were sampling with five customers, potentially extending HDD economics into higher-throughput workloads, The Globe and Mail reported.

Seeking Alpha described Western Digital as capitalizing on an AI-driven surge in demand for large-capacity, economical storage in the HDD segment and said WDC’s cloud revenue is nearly 90% of its business with long-term agreements providing pricing visibility through 2031.

Seeking Alpha added that Western Digital is ramping next-gen HAMR offerings, with 44TB and 50TB drives expected to drive shipment growth into fiscal 2027, and noted the stock traded at 22.9x forward earnings after falling from around +40x multiples in June.