Western Digital delivered the cleanest beat of the week’s chip and storage earnings and still could not escape the selloff. For the fiscal first quarter ended October 2, the company reported revenue of 4.38 billion dollars, up 55 percent year on year and 17 percent from the June quarter, against consensus of about 4.14 billion dollars. Adjusted earnings were 4.64 dollars per share, against 4.11 dollars expected and 1.78 dollars a year earlier, with GAAP earnings of 4.63 dollars per share and net income of 1.78 billion dollars.
The margins tell the demand story. Non-GAAP gross margin reached 58.1 percent, up 14.2 percentage points year on year, and non-GAAP operating margin reached 49.1 percent. Operating cash flow was 1.60 billion dollars and free cash flow 1.38 billion dollars, and the company spent about 1 billion dollars repurchasing stock in the quarter.
Guidance raised the bar again. For the December quarter Western Digital expects revenue of 5.0 billion to 5.2 billion dollars and adjusted earnings of 5.60 to 6.00 dollars per share, both well above consensus, and the board raised the quarterly dividend 17 percent to 0.175 dollars per share, payable December 17, 2026.
None of it protected the stock on the day. The shares fell in the regular session with the rest of the memory complex, on reporting that tied the selling to rotation out of AI linked shares and to worries about Chinese competitors adding supply, and fell further in extended trading. Western Digital is the counterpoint to the week’s narrative: here the AI spending of others is revenue, cash flow and a higher dividend, and the market sold it anyway.