Western Digital's fiscal 2026 (to July 3, 2026) revenue rose 36% to $12.92B as Cloud exabytes grew 27% and price per exabyte rose 8%; GAAP EPS of $24.28 is inflated by a one-time $6.5B Sandisk-stake gain, versus $10.22 non-GAAP.
Revenue
$12.9B
+35.7% YoY
Net income
$9.4B
+473.6% YoY
Diluted EPS
$24.28
+445.6% YoY
Operating margin
34.5%
How WDC compares with Information Technology peers
Figure
WDC
Peer median
Rank
Revenue growth (YoY)
+35.7%
+22.1%
16th of 63
Operating margin
34.5%
21.9%
13th of 63
EPS growth (YoY)
+445.6%
+35.5%
3rd of 56
Rank 1 = fastest revenue growth, highest operating margin, fastest EPS growth. Peers are the other Information Technology companies with a 2026 report on this site, each at its latest period we've analyzed; fiscal calendars differ, so periods are not always the same months.
Fiscal 2026: hard-drive prices and volumes rose together, and operating profit nearly doubled
Western Digital (WD) is now a hard disk drive (HDD) company only. It spun off its flash-memory business as Sandisk in February 2025, so every figure below is for the drive business, with Sandisk's pre-spin-off results excluded. This report covers WD's fiscal year 2026, which ended July 3, 2026. WD's fiscal year ends on the Friday closest to June 30, so fiscal 2026 falls almost entirely in calendar 2025–26. This site files it as the 2026 annual report. Figures come from the annual report on Form 10-K filed August 14, 2026, with fourth-quarter (April–July 2026) detail taken from the August 5, 2026 earnings release.
Revenue rose 36% to $12.92 billion, and GAAP operating income rose 91% to $4.45 billion. The 10-K gives the reason plainly: WD sold 25% more storage capacity, measured in exabytes, and got 8% more per exabyte, because demand was strong across all of its markets. GAAP diluted earnings per share rose more than fivefold, from $4.45 to $24.28. Most of that jump comes from a one-time, non-cash gain on the Sandisk shares WD kept after the spin-off, not from selling drives.
At a glance
$11.49B Cloud revenue, up 38%. Sales of high-capacity drives to data-center operators now make up 89% of the company. What happens in the rest of the business barely moves the total.
Price per exabyte up 8% while exabytes shipped rose 25%. Price and volume both went up at the same time, which is the sign of a tight market. Together with bigger, cheaper-to-make drives, that lifted gross margin from 38.8% to 48.9%.
Non-GAAP EPS of $10.22 versus GAAP EPS of $24.28. About $6.5B of GAAP net income came from marking the Sandisk stake to market. WD had disposed of every remaining Sandisk share by year-end, so that gain will not happen again.
The numbers
Money is in millions of US dollars except per-share figures. Fiscal 2026 had 53 weeks and fiscal 2025 had 52 (the extra week fell in the first quarter).
Metric
FY2026 (53 wks, to Jul 3, 2026)
FY2025 (52 wks, to Jun 27, 2025)
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Net income from continuing operations is used here so that both years show the drive business alone. Including Sandisk's pre-spin-off results, which WD reports as "discontinued operations," fiscal 2025 total net income was $1,889M.
Operating margin is the share of revenue left after paying to make the drives and run the company, before interest and tax. It rose 10 points because costs grew much more slowly than revenue. Revenue grew by $3.40B and gross profit by $2.62B, while operating expenses grew by only $500M. Research and development spending rose 17% to $1.16B, and SG&A (selling, general and administrative costs) fell 3%. In the 10-K's words, the gross-margin gain came from "an increased volume of shipments, a better cost structure on our newer generation products, a mix shift towards higher capacity drives and improved pricing."
Where the growth came from: end markets, exabytes and price
An exabyte is a billion gigabytes. HDD makers measure how much storage they ship in exabytes, because one high-capacity drive can hold as much as dozens of laptop drives. ASP per exabyte is the average selling price for each unit of capacity. When it rises, customers are paying more for the same amount of storage.
End market
FY2026 revenue
FY2025 revenue
Revenue YoY
Exabytes sold YoY
ASP per exabyte YoY
Cloud
$11,490
$8,341
+37.8%
+27%
+8%
Client (PC drives)
$726
$556
+30.6%
+3%
+26%
Consumer (external drives)
$703
$623
+12.8%
+1%
+12%
Total
$12,919
$9,520
+35.7%
+25%
+8%
Cloud means sales to hyperscalers (the largest cloud and data-center operators), "neoclouds" and enterprises. These customers mostly buy nearline drives: high-capacity drives that store large amounts of data which must stay available but isn't accessed constantly. The 10-K credits the 27% rise in exabytes to "strong demand for our high-capacity enterprise products" and the 8% rise in price to "an improved pricing environment." WD's business description calls storage "foundational to AI," and the company markets itself around the "AI-driven data economy." However, the MD&A explanation of the numbers points to demand for high-capacity drives and better pricing, and does not attribute a specific share to AI.
Client and Consumer revenue grew mostly through price, not volume. Client exabytes rose only 3% while price per exabyte rose 26%, and Consumer exabytes rose 1% while price rose 12%. WD says both followed "dynamics largely consistent with our other end markets." In other words, when supply is tight, pricing improves even in markets that are not growing.
The 10-K also notes that capacity improvements "lower product costs over time." Price per exabyte usually drifts down as drives get bigger. An 8% increase overall is therefore unusual, and it drove most of the margin gain.
By region, Asia grew fastest (+51% to $5.12B), ahead of EMEA (+38%) and the Americas (+24%). Revenue is assigned to the region where drives are shipped, so this tracks where customers' drives are assembled, not necessarily where the data centers are.
The fourth quarter (April–July 2026): still accelerating
Metric
Q4 FY26 (to Jul 3, 2026)
Q4 FY25 (to Jun 27, 2025)
YoY Change
Revenue
$3,747
$2,605
+43.8%
Gross margin (GAAP)
54.1%
41.0%
+13.1 pts
Operating margin (GAAP)
41.7%
26.1%
+15.6 pts
Net income, continuing ops (GAAP)
$3,195
$252
+1,168%
Diluted EPS (GAAP)
$8.21
$0.67
+1,125%
Diluted EPS (non-GAAP)
$3.56
$1.70
+109%
Free cash flow
$1,281
$675
+90%
Both quarters had 13 weeks, so the fourth-quarter comparison is cleaner than the full-year one. Revenue grew 12% from the third quarter ($3,337M), and GAAP gross margin rose from 50.2% to 54.1% in a single quarter. Q4 GAAP net income again includes a $2,050M Sandisk gain. Non-GAAP net income for the quarter was $1,382M.
What the headline numbers hide
Most of GAAP profit came from the Sandisk stake. WD recorded a $6,498M tax-free mark-to-market gain on the Sandisk shares it kept, which is about 69% of the $9,424M net income. It also recorded $907M of costs for using those shares, and some convertible notes, to retire debt and buy back its own stock. These were $545M on a debt-for-equity exchange, $254M on equity-for-equity exchanges and $108M on convertible-note transactions, mostly discounts given to the other parties. Net of those costs, the Sandisk-related items still made up roughly 59% of net income. The 10-K states that "as of July 3, 2026, the Company no longer held any shares of Sandisk common stock." Fiscal 2027 GAAP EPS will be compared against a $24.28 that includes these gains, so it may look like a collapse even if the drive business keeps growing. Non-GAAP EPS ($10.22) is the fairer measure of the drive business itself.
Operating income: the prior year looked better than it was. Fiscal 2025 GAAP operating income included a $198M credit from a patent-litigation settlement. Fiscal 2026 included $146M of business realignment (restructuring) charges, $43M of them in Q4, along with a $35M asset impairment in Q4. Excluding these items and stock-based pay, non-GAAP operating income rose 107%, faster than the 91% GAAP figure.
Cash conversion is solid once the Sandisk gain is removed. Operating cash flow of $3,929M is only 42% of GAAP net income, but that is because the Sandisk gain brought in no cash. Against non-GAAP net income of $3,943M, operating cash flow was about 1.0 times. Free cash flow (operating cash flow minus equipment spending) was $3,511M. One caveat: WD's cash-flow statement is consolidated, so fiscal 2025's $1,691M still includes Sandisk before February 2025.
Receivables and inventory are in line with sales. Accounts receivable rose 36% to $2,026M, matching 36% revenue growth, and year-end receivables are about seven weeks of Q4 sales, slightly fewer than a year earlier. Inventory rose 17% to $1,511M, much slower than sales. The 10-K says the build-up was "as we ramped production in response to growing demand." Sales incentives such as price protection and rebates fell to 9% of gross revenue from 10%, which supports the view that pricing is firm.
EPS growth came from operations, not share count or tax. Non-GAAP diluted shares rose 8%, from 352M to 380M, even though WD spent $2.59B buying back 14.7M shares. The increase came from the 2028 convertible notes and the preferred stock that converted into common shares in February 2026. As a result, non-GAAP EPS grew about 104%, slower than non-GAAP net income attributable to common shareholders (+120%). The non-GAAP tax rate also went up, to about 16% from about 10%, which reduced EPS. The one help from financing was lower interest: non-GAAP interest and other expense fell from $314M to $123M after debt was cut.
The extra week added some growth. The 53-week year gave fiscal 2026 about 2% more selling time than fiscal 2025. That is a small part of 36% growth, but it matters for the first quarter of fiscal 2027 (below).
Customer concentration increased. The top 10 customers made up 73% of revenue, up from 68% and from 55% in fiscal 2024. Three customers individually accounted for 16%, 15% and 13%. The 10-K also warns that its long-term agreements set "predetermined or formula-based prices." That gives WD volume visibility, but it could prevent WD from charging more if spot prices keep rising.
The balance sheet
Total debt fell from $4,749M to $1,060M over the year. That consisted of $710M of 3.00% convertible notes due 2028 and $350M drawn on a revolving credit facility that matures in January 2027. Cash was $1,579M, so WD ended the year with slightly more cash than debt. It has continued since year-end. An August 26, 2026 8-K described swapping about $191M of the convertible notes for cash plus shares. On September 14, 2026, WD called the remaining $109.5M for redemption on November 16, 2026, and expects "holders of substantially all Notes will convert" beforehand, which would add some shares. $3.26B of buyback authorization remained at year-end, and WD pays a $0.15 quarterly dividend.
Takeaway: Fiscal 2026 was both a volume and a price year for WD's drive business. Cloud exabytes rose 27% while price per exabyte rose 8%, which lifted gross margin by 10 points and more than doubled non-GAAP operating income. That $10.22 non-GAAP EPS is the figure to anchor on. The $24.28 GAAP EPS relies on roughly $6.5B of Sandisk-stake gains that ended when WD disposed of its last Sandisk share, so fiscal 2027 GAAP comparisons will look distorted.
Outlook
Management's guidance for the first quarter of fiscal 2027 (the quarter ending around early October 2026) is non-GAAP:
Item
Q1 FY27 guidance
Revenue
$4.1B ± $100M (up 42%–49% YoY)
Gross margin (non-GAAP)
55%–56%
Operating expenses (non-GAAP)
$390M–$400M
Tax rate
~17%
Diluted EPS (non-GAAP)
$4.00 ± $0.15
Diluted shares
~388M
At the midpoint, revenue would be about 9% above Q4's $3.75B and gross margin would rise about another point. The 42%–49% year-over-year growth is measured against a 14-week quarter a year ago, so on a same-length basis the underlying growth rate is higher than the headline. The CFO said he expects "further margin expansion," and the 10-K says capital spending in fiscal 2027 will be "higher than 2026" ($418M) to invest in "heads and media operations" (the recording heads and disks WD makes itself) and automation.
Our read: The filing supports a demand-and-pricing upcycle that has not yet peaked. Gross margin rose from 50.2% in Q3 to 54.1% in Q4, and the guidance calls for another increase. The risks are the ones the 10-K names. Demand depends on a handful of hyperscalers' spending plans, since three customers make up 44% of revenue. The long-term agreements could slow WD's ability to raise prices further. And gains from price per exabyte are hard to sustain in an industry where products normally get cheaper per unit of capacity each generation. Things to watch in the Q1 FY27 report: whether Cloud exabyte growth holds up against the longer prior-year quarter, whether gross margin reaches the guided 55%–56%, and how many shares the convertible-note conversions add.