Western Digital (WDC) AI Stock Analysis

Company Guidance

For the second quarter of fiscal 2027, WD expects revenue to be $5.1 billion, plus/minus $100 million, representing a 69% increase year-over-year at the midpoint; gross margin is expected to be in the range of 60% to 61%, operating expenses of $400 million to $410 million, interest and other expenses of $15 million, a tax rate of 17%, and diluted earnings per share of $5.80 plus/minus $0.20 based on a non-GAAP diluted share count of 380 million shares. The latest ePMR platform is expected to represent close to 30% of nearline shipments by the second quarter and 50% by the third quarter of fiscal 2027, while the company expects volume shipments of first-generation HAMR in the first half of calendar year 2027, qualifications with 2 additional customers during the first half of calendar year 2027, and second-generation HAMR qualifications in the second half of calendar year 2027. WD expects exabyte growth to accelerate through the rest of the fiscal year and fiscal year 2028, expects long-term nearline exabyte growth to exceed 25%, expects cost per terabyte to reduce approximately 10% year-over-year in the long run and be less than 10% down year-over-year in the near term, and expects ASP per terabyte growth to have further room to expand over the next 3, 4 quarters. Capital expenditures are expected to average 4% to 6% of revenue over a 5-year period and be modestly above that range over the next 2 years.