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Western Digital (WDC) is trading sharply higher today after reporting its Q1 (Sep) results last night. The company comfortably beat expectations on the top and bottom line, with revenue remaining robust, up 27.4% yr/yr to $2.82 bln. The midpoint of Q2 EPS and revenue guidance also sits ahead of expectations at $1.88 (range $1.73-2.03) and $2.9 bln (range $2.80-3.00).

• Management said the rapid acceleration of agentic AI adoption is generating massive data volumes, and that HDDs remain the most reliable, scalable, and cost-effective way to store them. Cloud revenue increased 31% yr/yr.
• This surge in AI workloads is fueling robust demand for its latest high-capacity ePMR drives (26TB CMR / 32TB UltraSMR), with shipments surpassing 2.2 mln units in Q1, up from 1.7 mln in Q4.
• The shift toward these higher-capacity drives is lengthening lead times, prompting customers to provide more visibility, with seven top hyperscalers having purchase orders through the first half of CY26 and five extending through all of CY26; one large customer is already under agreement for all of CY27.
• This mix helped boost gross margin 600 bps yr/yr and 260 bps sequentially to 43.9%.
• Management highlighted rapid progress in its HAMR development, noting it remains on track to begin qualification for one hyperscale customer in the first half of CY26 and to expand to up to three customers through the year, leaving it well positioned for a volume ramp in CY27.

Briefing.com Analyst Insight

Expectations were high coming into this report, and WDC delivered standout results. The call made it clear that the surge of AI-driven data is creating powerful and durable tailwinds for HDD adoption. Elevated shipments of its 26TB and 32TB drives, longer-duration hyperscale POs, and accelerated HAMR qualification point to sustained growth, strong visibility, and increasing confidence in its long-term roadmap. With a richer mix, expanding margins, and AI data workloads still accelerating, Western Digital appears well positioned heading into FY26 and beyond.