Western Digital's Q3 2025: Navigating Tariff Impacts, Capacity Dilemmas, and Demand Uncertainties

Tariff impacts and demand uncertainty, capacity investments and technology advancements, hyperscale demand and enterprise spending are the key contradictions discussed in Western Digital's latest 2025Q3 earnings call.



Revenue Growth and Product Innovation:
- Western Digital reported revenue of $2.3 billion for Q3 FY 2025, down 5% sequentially and up 31% year-on-year.
- The growth was driven by the strength of the company's product portfolio and robust demand from data center and hyperscale customers.

Supply Chain and Margin Improvement:
- The company's gross margin for Q3 was 40.1%, up 1.7 percentage points ahead of guidance, driven by a 5% increase in cloud drive pricing.
- Improved gross margins were a result of technological advancements that delivered total cost of ownership benefits to customers and tight supply demand management.

Strategic Long-term Agreements:
- Western Digital secured long-term agreements with two hyperscale customers extending to the first half of calendar year 2026.
- These agreements provide visibility into future needs, enabling effective planning and alignment with customer requirements.

Capital Allocation and Dividend Initiation:
- Western Digital initiated a quarterly dividend of $0.10 per share, expressing confidence in the company's financial strength and durability of business performance.
- This move aligns with the company's strategy to reinvest in the business, reduce debt, and return capital to shareholders.