WDC

Sandisk (NASDAQ:SNDK) built its name on memory cards and flash drives. But in its fiscal fourth quarter of 2026, which ended July 3, the company sold $2.98 billion of storage to datacenter customers -- about a third of its $8.97 billion in total revenue. A year earlier, that datacenter business generated just $213 million in quarterly sales. The scale of the change goes beyond one quarter. Sandisk separated from Western Digital in February 2025, and in fiscal 2026, its first full year on its own, it generated $20.25 billion of revenue, up 175%, with the datacenter piece up 437%. Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » But the bigger change isn't who is buying the company's storage. It's how they're buying it. Image source: Getty Images. Showing just how fast the customer base is moving, datacenter revenue has climbed for three straight quarters. It was $440 million in the fiscal second quarter, about 15% of the company's revenue. By the fiscal third quarter, it had grown to $1.47 billion, about 25%. And it hit $2.98 billion in the fourth, about a third of the total. That said, the edge business, which sells flash storage to makers of PCs, smartphones, gaming consoles, and cars, is still the biggest piece of the company, at $5.43 billion of fiscal fourth-quarter revenue. Consumer products, however, contributed just $556 million, about 6% of the quarter and down 5% year over year. In other words, the retail cards and drives Sandisk is named for are now its smallest business. Memory pricing is famously boom-and-bust, and Sandisk's answer is what it calls the New Business Model (NBM) -- multiyear supply agreements signed directly with large datacenter and edge customers. The terms are what make the shift structural. Chief financial officer Luis Visoso said on the company's August earnings call that Sandisk now has 10 of these agreements across eight customers, five of them signed since April. The agreements run as long as five years, with a weighted average duration of more than four years. Pricing includes fixed and variable elements, with the variable portion subject to floors and ceilings. In total, the NBMs Sandisk has signed represent a minimum of $93.9 billion in expected revenue, assuming every variable price settles at its floor. The deals are also backed by $16.5 billion of customer cash deposits and financial instruments. The contracted share is still growing, too. Management expects NBMs to cover about half of Sandisk's bit shipments in fiscal 2027, and about two-thirds in fiscal 2028. Of course, contracted volume isn't the same thing as guaranteed revenue, and the ceilings may cap Sandisk's upside if spot prices keep climbing. But I'd argue the floors matter more than the $93.9 billion headline number. Minimum prices under a growing share of shipments change the downside math in an industry known for brutal crashes. For all that structure, fiscal 2026 was mostly a pricing story. Sandisk's total products sold rose by a mid-teens percentage on an exabyte basis (a measure of raw storage volume shipped), while revenue rose 175%. And management said about two-thirds of the fiscal fourth quarter's sequential revenue growth came from higher pricing, with one-third from higher volumes. That pricing boom shows up most clearly in profitability. Gross margin reached 84.6%, up from 26.2% in the year-ago period. The company also swung to $6.9 billion of quarterly net income from a small loss a year earlier. And free cash flow for the full year went from a $120 million outflow in fiscal 2025 to $11.5 billion. Management doesn't expect a cooldown yet, either. It guided fiscal first-quarter 2027 revenue between $10.3 billion and $10.8 billion, up 15% to 20% sequentially, with gross margin expected to stay at 83% to 85%. The market remains skeptical, though. Shares trade around $1,537 as of this writing, down about 35% from a 52-week high, at about 21 times fiscal 2026 earnings. Measured against expected earnings for fiscal 2027, the price-to-earnings multiple falls to about 7. A steep decline in memory pricing, in other words, is arguably already priced in. Is Sandisk a different company now? On the customer side, I think it clearly is. A third of revenue comes from data centers, about half of this fiscal year's shipments are already committed under contract, and there are price floors where prices used to float freely. However, the new model hasn't been tested by a downturn yet. And even Sandisk's own long-term financial model, laid out at its August investor day, calls for non-GAAP (adjusted) gross margins of about 80% for fiscal 2028 through 2030 -- below the 84.6% it just reported. The floors cushion a fall in contracted pricing. They don't make fiscal 2026's boom prices permanent. Before you buy stock in Sandisk, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sandisk wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $435,803!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,334,577!* That performance is why people listen. With a track record of beating the S&P 500 by nearly 5x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of September 2, 2026. Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Western Digital. The Motley Fool has a disclosure policy. Data Centers Now Deliver a Third of Sandisk's Revenue -- $2.98 Billion in a Single Quarter was originally published by The Motley Fool

Bond market volatility has pushed government yields in major economies to multi year highs, which keeps borrowing costs in focus for every sector. At the same time, the physical plumbing of artificial intelligence is still being built out, from power hungry data centers to high grade connectivity. This creates a targeted way for you to focus on AI’s “picks and shovels.” This article highlights three stocks from that infrastructure theme. The three stocks in this article are just a starting sample. The full screen surfaced 52 more AI infrastructure companies with equally compelling narratives that are not covered here. If you want to rapidly identify and analyze your own high conviction plays across this theme, head straight into the AI Infrastructure Stocks screener. Western Digital is a global data storage company that develops and sells hard disk drives and related solutions used in everything from PCs to hyperscale data centers. Its business is highly focused on HDDs, which generated about US$12.9b in revenue, and within that, the data center drives and platforms segment is the clearest link to AI infrastructure because it supplies the high capacity storage that keeps AI training data and models online. The company sells across the United States, China, Hong Kong, the rest of Asia, and Europe, the Middle East and Africa, and is currently valued at around US$162.4b. For investors who want exposure to AI’s physical build out rather than just software stories, Western Digital offers a direct line into the storage racks of hyperscale data centers. The company is heavily tied to high capacity HDDs for AI data stores and has been reporting strong margins and free cash flow, which gives it room to invest in next generation products such as 40TB plus drives while returning capital through buybacks and dividends. The catch is that this is still a cyclical hardware market where a few big players control supply, and any break in discipline or a shift in the AI capex cycle could quickly pressure pricing and profitability. The key issue is how long Western Digital can keep that balance of tight supply, long term AI contracts and high margins working in its favor. Western Digital’s high margin HDD cash flows may be masking a more complex story involving AI data center exposure and capital returns. Get the full picture in the 4 key rewards and 2 important warning signs (1 is major!) Celestica is a Toronto based supply chain and electronics manufacturing company that builds complex hardware for sectors ranging from aerospace and industrials to cloud and enterprise computing. Its clearest link to the AI infrastructure theme sits in the Connectivity & Cloud Solutions segment, which generates about US$12.3b in revenue and includes rack scale platforms and server systems for hyperscalers, plus the Helios rack scale AI platform developed with AMD. The Advanced Technology Solutions arm adds roughly US$3.3b from end markets like aerospace and HealthTech, and the company as a whole is valued at about CA$47.8b. Celestica gives you exposure to the physical build out of AI data centers, with its Connectivity & Cloud Solutions segment designing and assembling the high density racks, switching gear and Helios AI platforms that hyperscalers are buying today. Analysts and recent UBS commentary link this to earnings and revenue momentum, supported by improving margins and high returns on equity as larger AI programs scale through its factories. The trade off is heavy exposure to a small group of powerful cloud customers and to rapid technology shifts such as the move to 800G and 1.6T networking, which can amplify both upside and execution risk. For investors looking at hardware suppliers tied to AI infrastructure spending, Celestica is a story that may warrant closer attention. Celestica’s AI rack and Helios momentum has many investors focusing on growth; yet the real story may be how that flows through earnings resilience. Get the analyst forecasts for Celestica and see what could shift next Vertiv Holdings Co builds the hardware that keeps high power data centers running, with a particular focus on liquid and air cooled thermal management systems and high density power distribution that are used to cool and feed energy to AI GPU racks. It generates most of its roughly US$9.5b in segment revenue from the Americas at about US$7.5b, with Asia Pacific at about US$2.7b and Europe, the Middle East and Africa at about US$2.4b, and has a market value of about US$99.6b. Vertiv may be of interest if you want exposure to the physical side of AI, where demand for liquid cooling and high density power gear is directly related to how many GPU racks hyperscalers deploy. The company combines this with lifecycle services and monitoring software, which can deepen customer relationships and support margins as AI capacity expands. The catch is that the stock already trades on a rich valuation and a handful of large cloud and data center customers drive a large share of orders, so any pause in AI capital expenditure or competitive pressure in cooling and power solutions could affect sentiment quickly. Vertiv’s surge into liquid cooling and high density power has many investors focused on AI excitement, while the rich valuation raises questions. Get the analyst forecasts for Vertiv Holdings Co and see whether the current enthusiasm is hiding something bigger. Fresh ideas do not stay under the radar for long. While momentum builds and breakouts form, the clean entry points get caught quickly. Check these themes and consider acting while conditions remain favorable. Spot cash rich companies before they start flying by scanning the 50 high quality undervalued stocks, curated for quality balance sheets and earnings power while it still matters. Ride structural growth trends with the 38 robotics and automation stocks, where automation leaders are quietly building momentum while most attention is fixed on headline AI stocks. Get ahead of the next infrastructure wave with the 39 power grid technology and infrastructure stocks, focused on companies tied to grid upgrades that support AI, electrification and data center expansion. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Micron (MU) holds a $955 price target, backed by 16 take-or-pay customer agreements and over $1 billion in HBM4 revenue already booked. Micron outguns NVIDIA (NVDA) and Western Digital (WDC) on gross margin at 85% while trading at a forward P/E of just 6. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Micron Technology didn't make the cut. Grab the names FREE today. Micron Technology (NASDAQ:MU) sits at the center of the AI memory trade. With NVIDIA (NASDAQ:NVDA) reporting later this week, the setup for its lead HBM supplier warrants careful pricing. Micron has run from the mid $120s a year ago to $910.43, and our proprietary model sees room to run into the earnings report. Our 24/7 Wall St. price target for Micron is $954.59 over the next 12 months, implying 4.85% upside from Monday's close. The model returns a hold at high confidence (90%), reflecting a stock near fair value after a violent revaluation but tethered to the strongest memory cycle on record. Micron is up 674.9% over the past year and 219.19% year to date, but has cooled recently, falling 10.01% in the past week and 5.83% in the last session. It trades roughly 21% below its 52-week high of $1,254.81. Fiscal Q3 revenue landed at $41.5 billion, up 346% year over year, with non-GAAP EPS of $25.11 beating consensus by 23.79%. Fiscal Q4 guidance calls for $50 billion in revenue and $31 in EPS at the midpoint. Retail sentiment on Reddit has cooled to neutral heading into Nvidia's print. Management's tone was aggressive. CEO Sanjay Mehrotra said "the memory industry has been structurally transformed by the proliferation of AI" and that "we see tightness persisting beyond 2027." Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Micron Technology didn't make the cut. Grab the names FREE today. The company has signed 16 Strategic Customer Agreements covering roughly 20% of DRAM volume and a third of NAND volume, with take-or-pay floors that CFO Mark Murphy said produce margins "significantly above prior peak margins." HBM4 12-high shipments are ramping twice as fast as HBM3E, with over $1 billion in HBM4 revenue already booked. The bull case scenario points to $1,332.99, a 46.41% return. The Street's $1,515.11 consensus sits higher, with 9 Strong Buys, 31 Buys, and zero Sells. Capex is exploding. Q3 burned $7.826 billion, with fiscal Q4 capex guided to roughly $10 billion and full-year FY26 spend near $27 billion. HBM4 concentration on a single lead customer amplifies Nvidia risk. A soft Nvidia guide could compress memory multiples fast. Micron's average one-week post-earnings change is -3.44% despite 8 beats and 0 misses. Bulls counter that the $100 billion minimum SCA revenue backlog and $18 billion in incoming cash deposits materially blunt cyclicality. Our bear case flags $699.01, or a 23.22% drawdown. NVIDIA is the demand engine. It trades at a P/E of 43 with Q1 FY27 revenue up 85.2% to $81.61 billion. Micron's 6 forward multiple looks strikingly cheap against NVIDIA given similar exposure to AI infrastructure spend (we profiled seven non-chipmaker suppliers powering that same buildout in a free report here: 7 Stocks Powering the AI Boom). Western Digital (NASDAQ:WDC), the pure-play HDD peer riding the same AI storage tailwind, posted fiscal Q4 revenue of $3.75 billion, up 43.8% year over year, with non-GAAP gross margins at 54.4%. Micron's 84.9% non-GAAP gross margin dwarfs both. That combination of higher margins and lower forward multiple makes our $954.59 target look conservative relative to peers. The 24/7 Wall St. price target is $954.59 with a hold rating at 90% confidence. The SCA backlog converts memory from a boom-bust asset into contracted cash flow. The setup improves if Nvidia reiterates gigawatt-scale AI capex guidance and Micron re-tests $1,000. The setup weakens if HBM4 pricing shows softness in the earnings report. These projections assume Micron continues executing SCAs on schedule and HBM4E reaches volume production in calendar 2027. Significant upside or downside could result from a shift in AI capex or a change in the HBM lead-customer relationship. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Micron Technology didn't make the cut. Grab the names FREE today. Contact [email protected] for any questions or corrections.

Over three-fourths of retail investors expect Nvidia to beat expectations for revenue and profit again, according to a Stocktwits poll. Retail sentiment for NVDA flipped to ‘bullish’ as of late Monday, from ‘bearish’ the previous day. Fifty-nine out of 62 analysts have a ‘Buy’ or higher rating on NVDA, with a consensus price target that is 46% higher than the stock’s last close. Nvidia Corp.’s shares fell for a seventh straight session on Monday, their longest losing streak in four years, even as investors and analysts broadly expect another strong report when the AI industry bellwether reports its results later this week. NVDA stock fell 2.9% on Monday, bringing its cumulative seven-session decline to 7.5%. Stocks tied to the AI trade dropped on Monday, extending their bumpy stretch, with memory players SanDisk and Western Digital emerging as the top two losers on the S&P 500. See what 10M+ investors are talking about. Get the Stocktwits Daily Rip for what retail is watching right now, free to your inbox A host of factors, including fresh U.S. economic pressure on Iran and fallout from the Treasury Department’s surprise announcement last week that it would double longer-term bond buybacks, weighed on the market. All eyes are on Nvidia’s report, which has become the biggest event of each quarter and could set the tone for tech stocks and the broader AI trade. The chipmaker is set to report its second-quarter results after market hours on Wednesday, with analysts expecting sales to jump 97.2% to $98.18 billion, marking the fastest pace of growth in a year. On Stocktwits, retail sentiment for NVDA flipped to ‘bullish’ as of late Monday, from ‘bearish’ the previous day. About 77% of the retail investors who voted in an ongoing Stocktwits poll expect Nvidia to beat expectations for revenue and profit. Eight percent expect Nvidia to miss profit estimates, while a similar share expect the company to fall short on revenue. NVDA stock has declined despite posting remarkably strong results in the last four quarters, complicating the math for investors. “$NVDA popular opinion seems to be double beat and sell off. Sooo double miss and moon?” wrote a trader in comments to the poll. Another said: “$NVDA had a nice ride over the past 5 years… I suspect they will have a double beat, but the expectation and the bar will have been set so high that there will be a lot of volatility regardless. NVDA has gained nearly 4% so far this month. Currently, 59 out of 62 analysts have a ‘Buy’ or higher rating on the stock, with an average price target of $304.73. The level implies an upside of 46% from the stock’s close on Monday. Nvidia said Monday that SpaceXAI will use its Vera CPUs to power next-generation AI agent applications, marking the first deployment of the chips in a major AI infrastructure project. SpaceXAI also plans to expand the AI infrastructure that supports Grok, using Nvidia's Vera Rubin platform. Nvidia also confirmed its Vera Rubin rack-scale system, Groq 3 LPX, had entered full production. In recent days, Cantor Fitzgerald reiterated its ‘Overweight’ rating on Nvidia, citing greater visibility into its data center business and a potential fourth-quarter IPO for Anthropic, a key Nvidia customer. Investors are also watching for market developments, which typically have an outsized impact on large stocks like Nvidia. The Trump administration on Monday announced a possible expansion of sanctions on countries doing business with Iran as part of what it billed as an "economic D-Day" and separately announced 50% tariffs on automobiles and crucial raw materials from Canada. For updates and corrections, email newsroom[at]stocktwits[dot]com. Yuvraj Malik has no position in any of the stocks mentioned in this article. StockTwits' news team content is for informational purposes only and is not intended as investment advice. For more, see our editorial policy. This article was originally published on StockTwits. Related: Why Did APP, ARRY, NFE Stocks Slump To 52-Week Lows Today? RUM Group CEO Vows Quake AI Will Challenge CoreWeave, Nebius: Retail Speculates Mystery $13.7B GPU Customer AFRM Vs KLAR: Which BNPL Stock Is The Better Buy Right Now?

Western Digital Corporation WDC ended fiscal 2026 with a fourth-quarter earnings beat, 44% revenue growth and sharply higher margins. The results give the company a strong starting point for fiscal 2027. The next test is execution. Higher-capacity drives must ramp on schedule if WDC is to translate rising cloud and artificial intelligence storage demand into sustained revenue, margin and earnings growth. Fourth-quarter revenues reached $3.75 billion, up 44% year over year and above the Zacks Consensus Estimate of $3.70 billion. Non-GAAP earnings of $3.56 per share topped the consensus mark of $3.35 and increased 109%. Non-GAAP gross margin expanded 1,310 basis points year over year to 54.4%. A richer mix of higher-capacity drives, favorable pricing and manufacturing discipline helped lift profitability, while blended price per terabyte increased by the high teens. Image Source: Zacks Investment Research For the first quarter of fiscal 2027, management expects revenues of $4.1 billion, plus or minus $100 million. At the midpoint, that represents about 45% year-over-year growth. Western Digital also projects non-GAAP gross margin of 55%-56% and earnings of $4 per share, plus or minus 15 cents. The outlook implies another step up from fourth-quarter profitability if demand and pricing remain favorable. Western Digital began shipping next-generation energy-assisted perpendicular magnetic recording drives with capacities up to 40 terabytes in the fiscal fourth quarter. The company has entered volume production with two customers. Management expects the platform to account for about half of nearline bits by the third quarter of fiscal 2027. Higher capacity per drive should allow WDC to deliver more exabytes without a corresponding increase in unit volumes. The roadmap calls for 44-terabyte heat-assisted magnetic recording products in the first half of calendar 2027 and 50-terabyte products in the second half. Customer qualification and manufacturing execution therefore remain central to the fiscal 2027 setup. UltraSMR adoption is advancing as well. Western Digital expects the technology to represent about 60% of nearline exabyte shipments as fiscal 2027 ends, making the sequencing of multiple product transitions important to capacity and cost gains. Management sees inference, agentic artificial intelligence and physical artificial intelligence as persistent storage drivers because these workloads continuously create and retain data. High-bandwidth drives are also sampling with five customers, potentially extending HDD economics into higher-throughput workloads. The theme is broader than WDC. Seagate Technology Holdings plc STX reported fiscal fourth-quarter 2026 revenues of $3.6 billion as a mass-capacity storage provider, while Sandisk Corporation SNDK said fiscal 2026 Datacenter revenues increased 437%, illustrating demand across different storage technologies. WDC's fiscal 2027 opportunity is substantial, but the product roadmap raises the execution bar. The company must sustain pricing, qualify new platforms and convert higher-capacity drives into the exabyte growth and margin expansion embedded in its outlook. The stock currently carries a Zacks Rank #2 (Buy), along with a Growth Score of A and  Momentum Score of A. Those scores favor growth and momentum characteristics, while the Value Score of F and VGM Score of C point to a less attractive value profile and a mixed combined reading. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC) : Free Stock Analysis Report Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report Sandisk Corporation (SNDK) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Western Digital (WDC) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company. The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this maker of hard drives for businesses and personal computers, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. This insight is at the core of our stock rating tool -- the Zacks Rank. The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008. Consensus earnings estimates for the next quarter and full year have moved considerably higher for Western Digital, as there has been strong agreement among the covering analysts in raising estimates. The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate: For the current quarter, the company is expected to earn $4.07 per share, which is a change of +128.7% from the year-ago reported number. Over the last 30 days, four estimates have moved higher for Western Digital compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 15.16%. The company is expected to earn $20.03 per share for the full year, which represents a change of +96.0% from the prior-year number. There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, six estimates have moved up for Western Digital versus no negative revisions. This has pushed the consensus estimate 9.02% higher. Thanks to promising estimate revisions, Western Digital currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500. Western Digital shares have added 6.6% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

Western Digital Corporation WDC delivered an impressive $3.5 billion in free cash flow (“FCF”) for fiscal 2026, representing a 27% FCF margin. In the fiscal fourth quarter alone, FCF reached $1.3 billion, translating into a solid 34% margin. This robust performance highlights the company’s ability to convert earnings into cash efficiently, while providing flexibility in capital allocation. WDC’s fiscal 2026 revenues increased 36% to $12.9 billion, driven by strong exabyte shipments and pricing tailwinds. Gross margin expanded 970 basis points (bps) to 49.1% and operating margin improved 1,290 bps to 37.3%. Favorable mix of high-capacity drives, pricing and efficient execution across manufacturing operations cushioned margin performance. Western Digital Corporation free-cash-flow-quarterly | Western Digital Corporation Quote Western Digital also demonstrated a clear commitment to returning value to its shareholders. The company returned $3.1 billion to its shareholders in fiscal 2026. During the fiscal fourth quarter, it repurchased $1 billion of stock and paid $54 million in dividends. The company ended the quarter with $1.6 billion in cash and $1.1 billion in debt, leading to a $500 million net positive cash position at the fiscal year-end. Looking ahead, management noted that it remains confident about the company’s long-term prospects, along with margin and cash flow expansion amid a rapid increase in cloud and other data-intensive workloads. Buoyed by strong demand trends, WDC expects fiscal first-quarter non-GAAP revenues of $4.1 billion (+/- $100 million), up 45% year over year at the midpoint.With strong demand visibility, improving pricing and a technology roadmap spanning 40TB ePMR and upcoming 44TB HAMR products, WDC appears well positioned to sustain robust FCF generation in fiscal 2027. However, cash-flow generation will hinge on the company’s ability to maintain pricing while converting strong demand into margin expansion. It also needs to watch out for intense competition in the space from the likes of Seagate Technology STX and NetApp NTAP, who are also vying for a larger share of the data storage market. Seagate is one of WDC’s closest competitors. Like WDC, STX is also witnessing rapid top-line growth amid the AI boom. Fiscal fourth-quarter non-GAAP revenues of $3.6 billion increased 48% year over year. The data center segment accounted for 81% of total revenues, at $2.9 billion, representing a 17% sequential increase and 57% year-over-year growth. Non-GAAP operating profit climbed 39% sequentially to $1.6 billion, with a 44.6% operating margin.Cash flow from operations during the fiscal fourth quarter was $1.3 billion compared with $1.1 billion in the previous quarter. Free cash flow increased 17% sequentially and 163% year over year to $1.1 billion. Seagate expects sequential cash flow growth in fiscal 2027, supported by strong demand, operational efficiency and disciplined capital spending. NetApp continues to benefit from demand for modern all-flash arrays that support enterprise modernization and AI workloads. The company’s business model continues to generate sizable cash flow that supports investment and capital returns. In the fiscal fourth quarter, operating cash flow was $950 million and free cash flow was $900 million, while fiscal 2026 free cash flow was $1.87 billion. Non-GAAP operating margin for fiscal 2026 was 30.2%, up 190 basis points year over year. The company returned $1.36 billion to shareholders in fiscal 2026 through dividends and repurchases, and increased its share repurchase authorization by $1 billion. Management expects to return up to 100% of free cash flow to its shareholders in fiscal 2027 and to reduce share count by a low single-digit percentage year over year. In the past month, shares have tanked 17.7% compared with the Zacks Computer-Storage Devices industry’s decline of 18.6%. Image Source: Zacks Investment Research In terms of forward price/earnings, WDC’s shares are trading at 21.04X, higher than the industry’s 9.1X. Image Source: Zacks Investment Research The Zacks Consensus Estimate for WDC’s earnings for fiscal 2027 has been revised up roughly 5% to $18.85 over the past 60 days. Image Source: Zacks Investment Research Currently, Western Digital holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Western Digital Corporation (WDC) : Free Stock Analysis Report NetApp, Inc. (NTAP) : Free Stock Analysis Report Seagate Technology Holdings PLC (STX) : Free Stock Analysis Report This article originally published on Zacks Investment Research (zacks.com). Zacks Investment Research

(Bloomberg) -- The latest reason to worry about the stock market is quite the doozy: Earnings growth has been too strong. Most Read from Bloomberg Phoebe Gates Knew Phia Shopping App Took Credit for Sales It Didn’t Drive Trump Weighs Call for Capital Gains Tax Cuts as Midterm Boost Tata Sons Chairman to Step Down, Deepening Leadership Turmoil Five Takeaways From Zuckerberg’s 6,500-Word Manifesto on AI Epstein Victim Files Cleared for Release Over Maxwell’s Protest As the latest reporting season nears completion, all signs are indicating the second quarter was one of the best three-month periods in recent memory with profit growth running at more than 30%. The only problem? That torrid pace is unlikely to last. The consensus currently expects growth to fall below 20% in the first quarter of 2027 before moderating into the mid-teens for the full year, according to strategists at Bank of America Corp. While in isolation those rates are healthy from a historical standpoint, the market often has been less supportive when earnings growth decelerates from elevated levels. It’s a recipe that potentially could place next year’s stock market in the weakest phase for equities: When earnings-per-share growth is above trend but decelerating, the S&P 500’s median 12-month return is 6.7% with a hit rate of 72.3%, according to BofA. That compares with a median 14% return and a hit rate of 83.3% when EPS growth is above trend and accelerating. Still, the historical data set is very limited when it comes to the type of profit bonanza unfolding this year. BofA strategists led by Savita Subramanian expect growth to remain above 20% in the third and fourth quarters, which would mark four consecutive quarters above that level. Streaks like that have been rare, occurring only 10 times since 1936. The most recent examples have taken place after EPS recessions, the strategists said. Examples include Covid and the global financial crisis. And the growth rate is not the only standout statistic for the second quarter reporting season. S&P 500 Index profits are also heading toward one of their largest beats on record versus analysts’ estimates, according to Citadel Securities. Scott Rubner, head of equity and equity derivatives strategy at the firm, noted that companies are also driving the steepest earnings-estimate revision path in at least 26 years. “Importantly, this is not just an AI story,” Rubner wrote in a note published on Tuesday. “The macro debate remains complicated, but the message from corporate America is much simpler: earnings are better than expected, and by a wide margin.” Overall, 85.2% of companies exceeded Wall Street’s EPS expectations through Monday’s close, which is the highest percentage since 2021, data compiled by Bloomberg Intelligence show. Furthermore, only 10.8% of companies have failed to meet expectations, which is the lowest number in three decades. The S&P 500 gained 0.3% on Wednesday as investors cheered better than expected quarterly reports from companies including CoreWeave Inc. and Super Micro Computer Inc. The question now: Is this is as good as it gets? Ben Inker, co-head of asset allocation at GMO, said that earnings have been “extraordinary” in the second quarter. However, there was a difference between the artificial-intelligence space and the rest of the market. Much of the latter can have its good earnings attributed to a “cyclical upturn.” “If the upturn continues, it is very likely to push up inflation and interest rates, and if it falters, companies are likely to disappoint relative to upgraded forecasts,” said Inker. While Bespoke Investment Group’s analysis shows companies are boosting their growth expectations at one of the highest clips in the last 25 years, the firm is exercising caution and warning of extremes. The elevation in analysts’ expectations and companies’ own guidance boosts the likelihood that “pockets of excess will emerge,” according to Noah Weisberger, chief US equity strategist at BCA Research, though he added that low-teens earnings growth expectations for 2027 looks achievable. Yet with interest rates elevated and a large amount of equity supply set to hit the market when more AI companies go public, it’s risky time for earnings growth to peak. “The bond market remains our chief source of concern for equities, given stretched multiples and an IPO wave that still needs to be absorbed at current valuations,” said Weisberger. “At some point, investors will rightly choose not to pay peak multiples for peak earnings.” Potentially, investors are realizing the bar now may be too high for companies in the coming quarters. BofA strategist Jill Carey Hall noted that market reactions to earnings beats and growth have been somewhat more muted in comparison to prior quarters, suggesting that “a lot of the good news has been priced in.” Western Digital Corp., Datadog Inc., Sandisk Corp. and DaVita Inc. all beat on the top and bottom lines but sold off. Indeed, Bloomberg Intelligence data has shown companies that have beaten on revenue, earnings, or both have on average seen flat one-day excess returns. And misses have triggered steeper selloffs. “Investors already were kind of positioning for this good news and strong earnings,” said Carey Hall. “Then once the stocks beat that, that reward isn’t really transpiring to be as much as you normally would see.” --With assistance from Geoffrey Morgan. (Updates with details throughout.) Most Read from Bloomberg Businessweek ICE Arrests Are Pushing Immigrant Families Deeper Into Poverty Supercharged by Social Media, the GLP-1 Boom Is Warping Teen Psyches Suno Says AI Is the Future of Music. Record Labels Say It’s Theft With EV Sales Slowing, Hybrid Cars Are Hot Again Lululemon Is At War With Itself ©2026 Bloomberg L.P.

Western Digital reported fourth-quarter 2026 sales of US$3,747 million and net income of US$3,195 million, with full-year sales reaching US$12.92 billion and net income US$9.42 billion, alongside a US$0.15 per-share cash dividend declared for payment in September 2026. Management highlighted that AI customers are already negotiating multi-year storage agreements, suggesting Western Digital is securing longer-term visibility into demand as data-intensive AI workloads expand. We’ll now examine how Western Digital’s sharply higher earnings and early AI-driven long-term contracts influence the company’s broader investment narrative. We've uncovered the 8 dividend fortresses yielding 5%+ that don't just survive market storms, but thrive in them. To own Western Digital, you need to believe that AI-driven data creation can support healthy demand for high-capacity storage while the company manages its reliance on a handful of hyperscale customers. The latest results show sharply higher earnings and early multi-year AI storage agreements, which reinforce the near-term demand story but do not remove the concentration risk if any major cloud buyer changes course. The most relevant announcement here is management’s disclosure that AI customers are already negotiating storage agreements stretching up to five years. That detail directly ties into the key catalyst: long-term visibility with top hyperscalers. These contracts may help smooth the inherent volatility in cloud spending, but they also underline how much Western Digital’s fortunes are tied to a small group of very large buyers. Yet, while long-term AI contracts look reassuring, investors should still be aware of the concentration risk if any hyperscaler decides to... Read the full narrative on Western Digital (it's free!) Western Digital's narrative projects $27.9 billion revenue and $10.7 billion earnings by 2029. This requires 33.3% yearly revenue growth and a $4.4 billion earnings increase from $6.3 billion today. Uncover how Western Digital's forecasts yield a $584.79 fair value, a 35% upside to its current price. Some of the lowest ranked analysts were already cautious, assuming earnings reach about US$11.5 billion by 2029 even as new AI storage agreements raise fresh questions about whether that more pessimistic path still fits the story. Explore 6 other fair value estimates on Western Digital - why the stock might be worth 24% less than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your Western Digital research is our analysis highlighting 4 key rewards and 3 important warning signs that could impact your investment decision. Our free Western Digital research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Western Digital's overall financial health at a glance. Our top stock finds are flying under the radar-for now. Get in early: Capitalize on the AI infrastructure supercycle with our selection of the 56 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. AI is about to change healthcare. These 43 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10b in market cap - there's still time to get in early. Outshine the giants: these 17 early-stage AI stocks could fund your retirement. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include WDC. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]