WDC · Q4 2026 Earnings

Bullish

Western Digital

Reported August 5, 2026

30-second summary

Western Digital printed Q4 revenue of $3.75B (+44% YoY, +12% QoQ), in-line at the high end of the $3.55–3.75B guide, non-GAAP EPS of $3.56 ($0.16 above the guide high end), and non-GAAP gross margin of 54.4% — a stunning +240bps above the 52% high end of the guide. The Q1 FY27 guide sets revenue at $4.0–4.2B (42–49% YoY off a $2.82B base) with gross margin stepping to 55–56% — a forward quarter that decelerates YoY growth nowhere and adds another ~110bps to margin. The 41.3% Q4 FY25 non-GAAP margin anchor is now +1,310bps in the rearview.

Headline numbers

EPS

Q4 FY2026

$3.56

+7.9% vs est.

Revenue

Q4 FY2026

$3.75B

+44.0% YoY

+1.3% vs est.

Gross margin

Q4 FY2026

54.1%

Free cash flow

Q4 FY2026

$1.28B

Operating margin

Q4 FY2026

41.7%

Key financials

Q4 FY2026

Metric	Q4 FY2026	Q4 FY2025	YoY	Q3 FY2026	QoQ
Revenue	$3.75B	$2.60B	+43.8%	$3.34B	+12.3%
EPS	$3.56	$1.66	+114.5%	$2.72	+30.9%
Gross margin	54.1%	41.0%	+1310bps	50.5%	+360bps
Operating margin	41.7%	26.1%	+1560bps	38.6%	+310bps
Free cash flow	$1.28B	$0.68B	+89.8%	$0.98B	+31.0%

Guidance

Q4 FY2026 results significantly beat EPS and gross margin guidance; FY2027 Q1 guidance projects 42-49% YoY revenue growth with expanding margins, signaling accelerating demand momentum.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q4 FY2026	$3.55B - $3.75B	$3.747B	+$0.00B (within high end of range, +2.3% above midpoint)	Beat
Non-GAAP EPS	Q4 FY2026	$3.10 - $3.40	$3.56	+$0.16 above high end (+4.7%)	Beat
Non-GAAP Gross Margin	Q4 FY2026	51% - 52%	54.4%	+2.4-3.4 pts above guide	Beat
Operating Expenses	Q4 FY2026	$385M - $395M	Not separately disclosed in actuals	—	Met

New guidance

Metric	Period	Guide	YoY
Revenue	Q1 FY2027	$4.0B - $4.2B	+41.8% - +49.0%
Non-GAAP Gross Margin	Q1 FY2027	55% - 56%	—
Non-GAAP EPS	Q1 FY2027	$3.85 - $4.15	—
Operating Expenses	Q1 FY2027	$390M - $400M	—
Tax Rate	Q1 FY2027	~17%	—
Diluted Weighted Average Shares	Q1 FY2027	~388M	—

Management tone

Customer optimization hangover → structural demand reset → timelines pulled forward → step-function AI demand → durability of demand and increasing visibility.

The framing has moved from "well positioned" to "increasing visibility into our business." Three quarters ago management was arguing that supply-demand would stay constrained through 2026. Two quarters ago LTAs were signed into 2027 and 2028. Last quarter LTAs extended to 2029 and demand was framed as a "step function." This quarter's language: "we enter fiscal year 2027 with continued confidence in the durability of demand and with increasing visibility into our business." "Durability" and "visibility" together are a posture on time — management is now speaking as though the FY27 revenue path is largely underwritten by contracted customers, not projected demand. That the Q1 FY27 guide of +45% YoY midpoint accelerates from Q4's +44% print supports the reading; forward quarters normally decelerate when a company clears a very high comparison bar.

"Secular data growth" replaces "AI tailwind." Q4 FY25 introduced agentic AI as a structural driver; Q3 FY26 called it a "compounding loop." This quarter the language collapses further: "WD is well positioned to capitalize on the secular data growth opportunity and deliver long-term shareholder value." "Secular" is the strongest form of the argument — no cyclical caveat, no workload-specific hedge, no reference to hyperscaler capex timing. Combined with the +45% YoY forward guide, management is asserting that HDD demand growth is a multi-year phenomenon whose slope is set by data generation, not by AI capex vintages.

The absence of an FY27 guide is now conspicuous. Five consecutive quarters without a quantified FY range, and the qualitative statement this quarter — "durability of demand," "increasing visibility" — makes the absence louder. Either management provides an FY27 framework at Q1 FY27 (in three months) or the no-FY-guide posture becomes structurally entrenched and the sell-side builds its own consensus without a company anchor.

Answers to last quarter's watch list

Whether Q4 revenue lands above the $3.75B high end. $3.747B printed — $3M below the high end of the $3.55–3.75B guide, breaking the three-quarter pattern of clearing the top of the range. Revenue landed in-line at the high end rather than beating it; the beat-vs-guide narrative held on EPS and margin but broke on the top line.

Resolved negatively

Whether gross margin reaches 52%. Decisively cleared. 54.4% printed against a 51–52% guide — +240bps above the high end, the widest margin beat in the post-spin run. Q1 FY27 guide is 55–56%.

Resolved positively

The customer count behind the 2029 LTAs. The press release did not quantify how many customers have committed through 2029.

Continue monitoring

HAMR ramp transition pace. No specific HAMR revenue contribution or updated customer qualification count was disclosed in the press release. The four-customer qualification figure from Q3 was not updated.

Continue monitoring

Pricing realization in LTAs. No explicit ASP/TB commentary was disclosed on the print. Gross margin of 54.4% is well above what mix alone would explain, which is circumstantial evidence pricing is showing up, but management did not attribute the beat.

Continue monitoring

Whether net interest expense actually steps to ~$10M. The Q1 FY27 guide sets interest and other expense, net at ~$15M — modestly higher than the ~$10M prior-quarter guide, indicating the debt paydown tailwind on interest expense is moderating. Status: Resolved (stepped to ~$15M, not ~$10M)

First quantified FY27 framing. Not provided. Five consecutive quarters without an FY range.

Resolved negatively

What to watch into next quarter

Whether Q1 FY27 revenue lands above the $4.2B high end. The Q4 print landed within (not above) the guide range for the first time in four quarters. If Q1 FY27 also lands within-range rather than above, the "beat and raise on top-line" pattern will have broken decisively and the market's algorithm for what constitutes a beat will need resetting.

Whether gross margin reaches 56%. Q1 guide midpoint is 55.5%; Q4 cleared its high end by 240bps. A 57%+ print would extend the +1,310bps four-quarter margin slope for a seventh straight quarter of guide-beats.

First quantified FY27 revenue and EPS range. Six consecutive quarters without FY guidance becomes a governance question. With Q1 alone guiding to $4.0–4.2B, a full-year framework would need to sit meaningfully above $16B to be internally consistent.

Composition and repeatability of the GAAP-to-non-GAAP gap. GAAP EPS of $8.21 vs. non-GAAP $3.56 — the GAAP figure is materially higher than non-GAAP, driven by the $2.05B gain on retained interest in Sandisk (mark-to-market on the retained stake) partially offset by $362M of costs on debt and equity transactions, per the reconciliation. With the retained interest now zero on the balance sheet, this driver of GAAP-over-non-GAAP is exhausted; watch whether GAAP normalizes below non-GAAP from Q1 FY27.

HAMR commercial revenue. Four customers were in qualification as of Q3. Watch for the first HAMR revenue attribution in Q1 FY27 commentary and whether ePMR-vs-HAMR mix disclosure begins.

Capital return cadence. FY26 buybacks totaled $2.59B and dividends $184M against $3.51B of FCF. With the $0.15 quarterly dividend maintained, watch for the FY27 capital return posture — a dividend raise or an expanded buyback authorization would be consistent with the "durability of demand" framing.

Sources

Western Digital Q4 FY2026 press release, filed 2026-08-05 — https://www.sec.gov/Archives/edgar/data/106040/000162828026053305/a4ex991-pressreleaseq426.htm
Western Digital Q1–Q3 FY2026 and Q4 FY2025 prior tapebrief coverage (for trend comparisons)

Get the next brief, free.

We publish analyst-grade earnings briefs the same day or morning after every call — headline numbers, segment KPIs, Q&A highlights, and tone analysis. Free during beta.

This is not investment advice.