Western Digital stock gains as AI storage lifts Q2 outlook

Western Digital reported strong fiscal first-quarter results on October 22, 2026, and set a higher bar for the storage market as cloud and AI workloads supported demand for high-capacity drives. The company said revenue for the quarter ended October 2 reached USD 4.381 billion, up 55 percent from a year earlier, according to its SEC filing.

GAAP diluted earnings per share rose to USD 4.63 from USD 3.07. Adjusted diluted earnings per share reached USD 4.64, compared with USD 1.78 in the prior-year quarter. Non-GAAP gross margin expanded to 58.1 percent from 43.9 percent, while non-GAAP operating margin increased to 49.1 percent from 30.4 percent.

AI storage demand drives guidance

Western Digital expects fiscal second-quarter revenue of USD 5.1 billion, plus or minus USD 100 million. At the midpoint, that implies year-over-year growth of about 69 percent. Management also forecast non-GAAP gross margin of 60 percent to 61 percent and adjusted diluted earnings per share of USD 5.80, plus or minus USD 0.20.

Chief Executive Irving Tan said the company was executing through technology transitions to meet rising storage demand and was extending visibility into future customer needs. Chief Financial Officer Kris Sennesael attributed the outlook to continued exabyte growth and improved pricing. The guidance is non-GAAP and excludes items such as stock-based compensation and business realignment costs, so it is not directly interchangeable with GAAP earnings.

The results also showed strong cash generation. Operating cash flow reached USD 1.604 billion and free cash flow was USD 1.377 billion in the quarter. Western Digital repurchased USD 1.001 billion of common stock and paid USD 56 million in dividends, indicating that capital returns remained a major use of cash even as the company continued investing in storage capacity.

Dividend adds a shareholder return

The board raised the quarterly dividend 17 percent to USD 0.175 per share. Payment is scheduled for December 17, 2026, to shareholders of record at the close of business on December 4. The increase strengthens the shareholder-return case, although the central investment debate remains the durability of pricing and hyperscale spending.

Western Digital's filing lists concentration among cloud customers and leading accounts, supply-chain disruptions, product transitions and changes in trade policy among the risks to its forward-looking outlook. Strong guidance therefore improves the near-term earnings picture without removing the cycle and execution risks attached to the storage industry.

Western Digital stock traded at 281.73 euros on Lang & Schwarz at 14:16 CET on Wednesday, November 11, 8.78 percent above the Xetra close of 259.00 euros on Tuesday, November 10.

Investors can track the broader US market through current S&P 500 market reports as storage and technology shares respond to AI investment expectations.

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