Western Digital's Q2 Revenue Surges 30% Year-Over-Year, Beats Estimates

Western Digital, a leading global data storage manufacturer, reported its second-quarter financial results for 2025 on Wednesday, Eastern Time. The company's revenue for the quarter surged by 30% year-over-year, reaching 2.61 billion dollars, surpassing Wall Street's expectations by approximately 5%. The non-GAAP earnings per share stood at 1.66 dollars, exceeding analysts' average estimate of 1.48 dollars by 12.1%.

In addition to the revenue growth, Western Digital's adjusted operating profit for the second quarter was 732 million dollars, higher than the analysts' forecast of 667.5 million dollars. The profit margin was 28.1%, exceeding expectations by 9.7%. The free cash flow profit margin was 25.9%, an improvement from the same period last year at 12.5%.

Founded in 1970 by an employee of Motorola, Western Digital is a prominent manufacturer in the fields of hard disk drives (HDD), solid-state drives (SSD), and flash memory. The company's long-term performance is a reflection of its overall quality. While any company may experience a few quarters of strong performance, many enduring companies achieve sustained growth over multiple years. Over the past five years, Western Digital's demand has been weak, with an average annual revenue decline of 10.7%. This indicates relatively lower business quality. The semiconductor industry is cyclical, and long-term investors should be prepared for the alternating cycles of high growth and revenue contraction.

In the semiconductor industry, looking at a five-year historical performance may overlook new demand cycles or industry trends such as artificial intelligence (AI). Western Digital's recent performance indicates that its demand remains suppressed, with an average annual revenue decline of 12.1% over the past two years. However, the company's second-quarter revenue grew strongly by 30% year-over-year, with 2.61 billion dollars in revenue exceeding Wall Street's expectations by 4.8%. In addition to exceeding expectations, this also marks the company's fourth consecutive quarter of growth, indicating that Western Digital is in the upward phase of the industry cycle. Typically, an upward cycle lasts 8-10 quarters.

Looking ahead, sell-side analysts predict that the company's revenue will grow by 10.3% over the next 12 months, an improvement over the past two years. This forecast is encouraging, suggesting that new products and services will drive revenue performance. In terms of product demand and inventory status, the Days Inventory Outstanding (DIO) is an important indicator for chip manufacturers. It reflects the capital intensity of the enterprise and the cyclical nature of semiconductor supply and demand. In an environment of supply tightness, inventory tends to remain stable, allowing chip manufacturers to control pricing. A continuous increase in inventory turnover days may be a warning sign of weak demand, and if inventory continues to rise, the company may need to reduce production.

This quarter, Western Digital's inventory turnover days were not available (data missing). However, the company's significant improvement in inventory levels and its quarterly performance guidance exceeding analyst expectations have left a deep impression on the market. Its revenue, earnings per share, and adjusted operating profit all exceeded Wall Street's expectations, which is encouraging. Overall, this earnings report performed well, showing an upward trend in multiple key areas. Following the release of the financial report, the company's stock price surged, rising more than 10% to 79 dollars in after-hours trading.