Western Digital 2025 Q4 Earnings Strong Performance as Net Income Surges 623%

Western Digital (WDC) reported its fiscal 2025 Q4 earnings on July 30th, 2025. The company achieved revenue and gross margin above expectations, leading to strong free cash flow. It also reduced debt by $2.6 billion, initiated a cash dividend, and announced a $2.0 billion share repurchase program. Guidance for the fiscal first quarter of 2026 signals continued growth, with projected revenue of $2.7 billion, plus/minus $100 million. Non-GAAP EPS is estimated at $1.54, reflecting a positive outlook for the upcoming year.

Revenue

The total revenue of Western Digital increased by 30.0% to $2.60 billion in 2025 Q4, up from $2 billion in 2024 Q4.

Earnings/Net Income

Western Digital's EPS rose 827.1% to $0.78 in 2025 Q4 from $0.08 in 2024 Q4, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $282 million in 2025 Q4, marking 623.1% growth from $39 million in 2024 Q4. The EPS surge indicates a robust financial performance.

Price Action

The stock price of Western Digital has edged up 2.85% during the latest trading day, climbed 3.04% during the most recent full trading week, and jumped 12.86% month-to-date.

Post-Earnings Price Action Review

The strategy of buying Western Digital shares after a revenue raise quarter-over-quarter on the financial report release date and holding for 30 days has delivered strong returns over the past three years. This approach achieved a 129.45% return, significantly outperforming the benchmark return of 87.61%, resulting in an excess return of 41.83%. The strategy's compound annual growth rate (CAGR) was 18.19%, reflecting consistent growth during the period. Although the strategy demonstrated a maximum drawdown of 0.00%, it experienced relatively high volatility at 44.26% and a Sharpe ratio of 0.41. This suggests that while the strategy effectively minimized losses, it also embraced moderate risk to achieve its returns.

CEO Commentary

Tiang Yew Tan, CEO & Director, emphasized that AI is driving a new era of data growth, fundamentally changing data creation, collection, and storage, resulting in increased demand for Western Digital's products. He highlighted that the company is successfully managing capacity while delivering reliable, high-capacity drives, noting a significant rise in shipments of their latest generation of drives. Tan expressed optimism about the company's future, stating they are on track for product qualification milestones and are poised to benefit from the increasing need for storage driven by AI advancements. He underscored Western Digital's strong results and strategic focus, reflecting customer trust and disciplined execution.

Guidance

For the first quarter of fiscal 2026, Western Digital expects revenue between $2.7 billion, plus/minus $100 million, reflecting approximately 22% year-over-year growth. The company projects gross margin to be between 41% and 42%, with operating expenses anticipated to rise to a range of $370 million to $380 million. The effective tax rate is expected to be between 16% and 19%, leading to an EPS estimate of $1.54, plus/minus $0.15 based on a diluted share count of approximately 363 million shares.

Additional News

In recent strategic moves, Western Digital announced the authorization of a $2.0 billion share repurchase program, reflecting confidence in its long-term cash-generating capabilities. Subsequently, the company declared a cash dividend of $0.10 per share, to be paid on September 18, 2025, to stockholders of record as of September 4, 2025. These actions underscore Western Digital's commitment to returning value to shareholders amid its strong financial performance. Additionally, the company is focused on leveraging advancements in AI and data storage technologies to enhance its market position.