Western Digital's 55% Revenue Surge Meets a Wall of Capex Worries
Published on 10/25/2026 at 16:41 | Editorial boerse-global.de
Western Digital delivered the kind of quarter most hardware makers can only dream about — and still watched its shares slide 2.7% on Friday. The disconnect says less about the results themselves than about what investors are now asking of anyone tied to the artificial intelligence buildout.
Revenue for the first quarter of fiscal 2027 came in at $4.381 billion, up 55% year over year, according to figures released Thursday. Adjusted diluted earnings per share on a non-GAAP basis reached $4.64, while GAAP diluted EPS was $4.63. Those are robust operating numbers by any measure. Yet the stock fell as a broader selloff in AI-linked technology names swept the sector, with concerns about how the infrastructure buildout will be financed — and whether the spending can last — overshadowing the headline beat.
Guidance Is Strong, but It's Still a Forecast
For the second quarter of fiscal 2027, management projected revenue of $5.1 billion, give or take $100 million. Adjusted diluted EPS is expected between $5.60 and $6.00, a range of 20 cents either side of the midpoint.
The outlook offers a genuine counterweight to market skepticism. It is, however, a company expectation rather than revenue already booked — a distinction that sits at the heart of Friday's trading. A confident forecast can temper worries about the wider investment cycle; it cannot erase them.
Should investors sell immediately? Or is it worth buying Western Digital?
Capex and Supply Take Center Stage
What drew particular attention was management's guidance on capital spending. The company expects capex slightly above its usual range of 4% to 6% of revenue over the next two years. Media reports also pointed to worries about the sustainability of AI investment and the prospect of growing hard-drive supply. Growth alone, in other words, was not enough to settle the debate — the market is now pricing the durability of the entire spending cycle, not just the quarter in hand.
Analysts Split on What the Numbers Are Worth
Friday's analyst reactions captured the tension between business momentum and valuation. Cantor Fitzgerald cut its price target to $625 from $900, citing lower valuation multiples. That is a very different statement from a call on operational deterioration: the same business success is simply being valued more conservatively. J.P. Morgan moved the other way, lifting its target to $650 from $600, while several other firms trimmed their marks.
Such dispersion undercuts any tidy explanation for the share-price decline. The results clearly did not miss every expectation; instead, opinions diverge on what multiple is appropriate under changed market conditions. Price targets remain estimates, not promises about where the stock goes next.
A Bigger Payout — and a Notable Insider Sale
Alongside the results, Western Digital raised its quarterly dividend by 17% to $0.175 per share, payable December 17 to shareholders of record as of December 4. The increase reinforces the picture of a company with strong growth and an upbeat outlook, though it does nothing to answer the question that dominated Friday's session: how sustainably the torrid pace of AI-infrastructure spending can be financed.
A separate SEC filing Thursday disclosed that chief legal officer Cynthia Tregillis sold 807 shares at $380 apiece on Wednesday, a transaction made under a Rule 10b5-1 plan.
The line investors are drawing is not between good and bad quarterly results. It runs between proven business strength and confidence that the investment cycle underpinning it will hold.
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