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**Key Takeaways:**
- **Revenue Surge**: $2.8B (+27% YoY), driven by hyperscale demand and 2.2M ePMR/UltraSMR units. 
- **Profitability Boost**: 43.9% gross margin (660bps YoY), with $599M free cash flow. 
- **Strategic Investments**: New test lab accelerates product development; HAMR qualification begins in H1 2026. 
- **Customer Confidence**: 5/7 hyperscale with FY26 POs, 1 with FY27 agreement, and 25% dividend increase. 
- **AI Growth Driver**: 23% exabyte CAGR expected, with HDDs retaining 80% of data center storage share.

**【CEO Summary Section】**
- **AI-Driven Demand Growth**: CEO highlights AI's role in driving data storage needs, citing a medical institution analyzing 7 billion images. 
- **Internal AI Adoption**: 10% productivity gains in manufacturing and 20% in firmware development through AI tools. 
- **Product Shipments**: 2.2 million ePMR/UltraSMR units (70 exabytes) in Q1, with 3 million+ expected in Q2. 
- **New Test Lab**: 25,600 sq.ft. facility for hyperscale customer collaboration, accelerating product qualification. 
- **Customer Commitments**: 5/7 hyperscale customers with FY26 POs, 1 with FY27 agreement, and HAMR qualification for 1 customer in H1 2026. 

**【CFO Financial Commentary】**
- **Revenue Performance**: $2.8B (27% YoY), driven by 31% YoY growth in cloud storage. 
- **Gross Margin**: 43.9% (660bps YoY improvement), benefiting from higher capacity mix and cost control. 
- **Free Cash Flow**: $599M, with $785M returned to shareholders via buybacks and a 25% dividend increase to $0.125/share. 
- **Q2 Guidance**: Revenue $2.9B (20% YoY), EPS $1.88, and gross margin 44-45%. 

**【Q&A Highlights】**
- **Supply-Demand Balance**: 89% of revenue from hyperscale, no seasonality; 2026 supply constrained, 2027+ ramp expected. 
- **HAMR Progress**: Qualification for 1 customer in H1 2026, targeting 3 by end of 2026; 28TB CMR/36TB UltraSMR ePMR in Q1 2026. 
- **Customer Agreements**: 5/7 hyperscale with FY26 POs, 1 with FY27 agreement; ASP stability in hyperscale, 10-15% channel impact from Sep price increase. 
- **AI Spend Impact**: HDDs retain 80% of data center storage share due to TCO advantages; 4-5% of AI CapEx allocated to storage. 
- **SanDisk Stake**: 7.5M shares remaining, plans to monetize by Feb 2026; proceeds may be used for debt reduction or growth investments.

Western Digital Corporation (WDC) Q1 2026 Earnings Call Transcript

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WDC

WDC fundamentals

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