Western Digital Q3 EPS Beats by $0.36; Stock Falls 6% Despite Rally
WDC•Western Digital’s Q3 adjusted EPS of $2.72 and $3.34B revenue beat estimates by $0.36 and $110M, underpinned by 45% YoY growth from AI-driven HDD demand. Shares dropped 6% despite the beat as Q4 guidance of $3.10–$3.40 EPS on $3.55–$3.75B revenue topped forecasts.
1. Third-Quarter Financial Results
Western Digital’s fiscal Q3 saw adjusted EPS of $2.72, topping estimates by $0.36, on revenue of $3.34 billion – a 45% increase year-over-year. Gross margin expanded to 50.5%, driven by robust AI-driven demand for high-capacity hard disk drives across training and inference workloads.
2. Stock Performance and Investor Reaction
Despite the beat, shares fell 6% in after-hours trading following a rally that had more than doubled the stock year-to-date. Investors appeared to recalibrate valuations after pricing in strong AI-driven growth and supply tightness into prior gains.
3. Fourth-Quarter Outlook and Capital Returns
For Q4, management forecast EPS of $3.10–$3.40 and revenue of $3.55–$3.75 billion, both above consensus at the midpoints. The company also raised its quarterly dividend by 20% to $0.15 per share and launched a $4 billion share buyback, underscoring strong free cash flow generation.
