During a recent appearance on 'The Exchange,' Western Digital CEO Irving Tan emphasized that the surge in AI inference workloads is generating vast volumes of new data, driving record demand for high-capacity storage solutions. He noted that hyperscale data centers have doubled their deployment of nearline hard disk drives over the past year, and that enterprise customers are accelerating transition to four-platter designs to support training and inference environments. Tan disclosed that Western Digital shipped 215 exabytes in the second quarter—a 22% year-over-year increase—and highlighted that qualified next-generation products on the Hammer and EPMR roadmaps are already in customer trials, underscoring the company’s readiness for sustained AI-driven growth.

Western Digital reported non-GAAP revenue of $3.017 billion for Q2 FY26, up 25% from the prior year, while non-GAAP gross margin expanded by 770 basis points to 46.1%. Operating income climbed 72% year-over-year to $1.019 billion, and diluted non-GAAP earnings per share reached $2.13, surpassing analyst consensus by nearly 9%. The company generated over $1.8 billion in free cash flow and returned more than 100% of that to shareholders through share repurchases and dividends. For Q3, management forecast revenue around $3.2 billion and non-GAAP gross margin near 47.5%, reflecting continued strength in data-center demand and cost discipline.

In late January, UBS raised its recommendation on Western Digital to Buy, boosting the target from $230 to $285, citing the company’s superior execution on high-capacity drives and expanding margin profile. Shortly thereafter, Barclays analyst Tom O’Malley lifted his price target to $325, implying roughly 17% upside, and praised the sustained 22% growth in exabyte shipments and improved cost structure. These dual upgrades follow three consecutive quarters of outperformance and suggest that expectations for both near-term earnings and long-term capital returns may be revised higher by the street.