Western Digital Corporation reported fiscal second‑quarter 2026 results that surpassed consensus expectations, with revenue of $3.017 billion and a non‑GAAP gross margin of 46.1%, up 220 basis points from the prior quarter. Operating income rose 62% year‑over‑year to $1.019 billion, while diluted earnings per share reached $2.13, beating the consensus estimate of $1.93 by $0.20 per share.
Revenue growth was driven by a 25% year‑over‑year increase to $3.017 billion, largely from the cloud segment, which accounted for 89% of total revenue ($2.70 billion). The client and consumer segments contributed 6% ($176 million) and 5% ($168 million) respectively, reflecting a continued shift toward high‑capacity drives for hyperscale data centers. Compared with the same quarter in fiscal 2025, revenue rose from $2.409 billion, underscoring a strong acceleration in demand for high‑capacity storage.
The company’s gross margin expansion to 46.1% reflects a mix shift toward higher‑margin UltraSMR drives and disciplined cost control across manufacturing and supply‑chain operations. Operating income’s 62% increase is a result of both higher revenue and improved margin, offsetting modest increases in raw‑material costs. The operating margin grew from 43.5% in Q1 FY26 to 46.1% in Q2 FY26, illustrating effective leverage as the business scales.
EPS of $2.13 beat the consensus of $1.93 by $0.20, a 10.4% overrun. The beat was driven by the combination of higher revenue, margin expansion, and a favorable product mix that reduced the impact of lower‑margin consumer drives. The company’s GAAP diluted EPS of $1.27 in Q2 FY25 provides a baseline that highlights the significant earnings acceleration achieved this quarter.
Management reiterated its confidence in continued growth, guiding fiscal third‑quarter revenue to $3.2 billion and a non‑GAAP gross margin of 47.5% at the midpoint of its range. The guidance signals sustained demand from cloud and AI‑driven data centers, while the margin target reflects expectations of further mix improvement and cost discipline.
CEO Irving Tan emphasized that disciplined execution has “enabled us to meet the growing demand in the AI‑driven data economy,” while CFO Kris Sennesael noted that the UltraSMR mix exceeded 50% of near‑line drives and is expected to rise further. The market reacted positively, with the stock trading near a 52‑week high and up 2.25% in after‑hours trading, reflecting investor confidence in the company’s execution and growth prospects.
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