Western Digital (WDC) falls 39% over three months as FY26 revenue reaches $12.9 billion and analyst consensus holds Strong Buy
A 39% pullback over three months has brought Western Digital (WDC) to roughly 46% below its recent peak of $799.87, even as the company's fiscal 2026 results show revenue up 36% to $12.9 billion. Concerns over pricing sustainability, compounded by remarks from AI industry figures calling for a more measured pace in frontier model development, drove the selling. The setup now prices WDC at about 22.8 times forward earnings, with a majority of analysts at Strong Buy and an average consensus price target of $668.39.
Key takeaways
- Western Digital (WDC) has fallen 39% over three months and trades roughly 46% below its recent peak of $799.87.
- Fiscal 2026 revenue rose 36% to $12.9 billion, with EPS of $10.22 (more than double the prior year) and $3.5 billion in free cash flow.
- FY26 gross margin reached 49.1% (up 970 basis points) and operating margin widened 1,290 basis points to 37.3%.
- Most analysts rate WDC a Strong Buy with an average consensus price target of $668.39, about 56% above current levels.
- Analyst consensus projects FY27 EPS of about $19.65 and FY28 EPS of about $34.03, though these are projections, not company guidance.
A 39% pullback over three months has brought Western Digital (WDC) to roughly 46% below its recent peak of $799.87, even as the company's fiscal 2026 results show revenue up 36% to $12.9 billion. Concerns over pricing sustainability, compounded by remarks from AI industry figures calling for a more measured pace in frontier model development, drove the selling. The setup now prices WDC at about 22.8 times forward earnings, with a majority of analysts at Strong Buy and an average consensus price target of $668.39.
FY26 numbers and the margin story
Resilient HDD demand and stronger pricing supported the fiscal year's bottom line. Gross margin reached 49.1%, a 970-basis-point expansion, while operating margin widened 1,290 basis points to 37.3%. Earnings per share came in at $10.22, more than double the prior-year figure, and the company generated $3.5 billion in free cash flow. The improvement tracks a deliberate shift toward higher-capacity hard disk drives: these products can lower cost per unit and reduce the physical footprint of large-scale data center deployments, potentially making them increasingly attractive as storage requirements scale. Over time, greater exposure to higher-value storage products could further support gross margins. Long-term customer agreements add order book visibility, smoothing capacity planning and providing more stable cash flow across the cycle.
What the consensus is watching
The demand case rests on storage intensity expanding across multiple applications. As AI models grow more complex they generate greater data volumes, and the emergence of agentic AI could push that demand further. Beyond data centers, autonomous vehicles, robotics, industrial automation, and humanoid systems each add to total data generation, creating additional storage requirements over time. Western Digital's higher-capacity HDD lineup is positioned to serve that demand, with the product mix shift potentially supporting margins as unit capacity rises.
Analyst consensus projects fiscal 2027 EPS of approximately $19.65, roughly double the FY26 figure. The estimate extends to FY28, where consensus points to approximately $34.03 in EPS, implying roughly 73.2% growth from the FY27 level. Both are analyst projections, not company guidance. The consensus price target of $668.39 represents approximately 56% upside from current levels.
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Filed by the newsroom of MarketPR on September 18, 2026. Source: finance.yahoo.com. Indicative figures are not investment advice.