Western Digital Earnings: Sales Up 55%, Average Sales per Terabyte Up 28%
Western Digital took in 28% more on average for each terabyte of storage it shipped than a year earlier, by our calculation, as data centers kept buying hard drives. Its sales jumped 55% to $4.38 billion in the quarter to October 2, 2026, results it reported Thursday after AI and chip stocks led the Nasdaq lower.
The short answer. Western Digital's sales grew faster than in any quarter of the past year, and the money it collects per terabyte rose faster than the amount of storage it shipped. That matters beyond its shareholders. These drives hold the photos, videos and AI data that cloud services keep. Its buyers, mostly cloud companies, paid more per terabyte on average for storage that cost less to make. We split the growth using the company's own shipment figures. All of the extra money per terabyte, plus a little more from lower costs, became gross profit, what is left after the cost of making the drives.
Western Digital's quarter to October 2, 2026, in three numbers
What we calculated
- Average sales per terabyte of $17.67, up 28% from $13.81 a year earlier: revenue divided by the exabytes shipped (an exabyte is a million terabytes)
- Gross profit per terabyte of $10.22, up 70% from $6.01, with cost per terabyte down 4.5% to $7.45: the same division
- The 55% sales growth as 22% more terabytes times 28% more taken in per terabyte, which multiply back to 55%
- Sales $181 million above the top of the company's August forecast, the widest gap in six reports: each result against the range given a quarter earlier
- Sales growth of 69% from a year earlier at the midpoint of the December 2026 quarter forecast: $5.1 billion divided by $3,017 million a year earlier, minus one
- Gross margin, the share of sales left after making the drives, up 12 quarters in a row: standard accounting (GAAP) figures since the quarter to September 2023
- About 77% of free cash flow (cash left after equipment spending) used for buybacks and dividends: the two cash flow lines added and divided by free cash flow
On this page
- Why is Western Digital getting more per terabyte?
- What Western Digital says about hard drive pricing
- What Western Digital's results say about AI storage demand
- Did Western Digital beat its forecast, and what does it expect next?
- Western Digital dividend, buybacks and debt
- How we counted
- Frequently asked questions
Why is Western Digital getting more per terabyte?
Western Digital credits both higher shipments and better prices. Each terabyte now brings in more money while costing a little less to make, so its profit on every terabyte has jumped.
Hard drive storage usually gets cheaper to make over time. Drive makers squeeze more data onto each spinning disk, and Western Digital's own annual report says those capacity gains "lower product costs over time" (Form 10-K for fiscal 2026).
Over the past year that held on the cost side. What changed is what buyers pay. Western Digital shipped 248 exabytes of storage in the quarter, according to its earnings presentation. An exabyte is a million terabytes.
Dividing the quarter's sales by those exabytes gives an average of $17.67 per terabyte, against $13.81 a year earlier. Through most of 2025 the figure hardly moved, as the chart shows.
The finance chief, Kris Sennesael, credited growth in exabytes shipped "and improved pricing" in the results release. Shipments rose 22% in a year, and the average take per terabyte rose 28%. That average is not a price tag, though. The mix of drives and customers can also move it up or down, apart from any change in prices.
Show the data
| Category | Cost per terabyte | Gross profit per terabyte |
|---|---|---|
| Mar 2025 | $8.33 | $5.49 |
| Jun 2025 | $8.09 | $5.62 |
| Sep 2025 | $7.80 | $6.01 |
| Dec 2025 | $7.61 | $6.42 |
| Mar 2026 | $7.48 | $7.55 |
| Jun 2026 | $7.44 | $8.78 |
| Sep 2026 | $7.45 | $10.22 |
The cost side helped too. Making a terabyte cost $7.45 this quarter, 4.5% less than a year earlier, and it has held near that level for three quarters. Add the higher take to the lower cost, and gross profit per terabyte rose 70% (the chart's data table has each step).
The same story shows up in the gross margin, the share of sales left after the cost of making the drives. It has risen in every quarter since the one to September 2023, when it stood at 20.4% and the company was losing money on its operations. This quarter it reached 57.8%.
Show the data
| Category | Value |
|---|---|
| Sep 2023 | 20.4% |
| Dec 2023 | 22.9% |
| Mar 2024 | 29.6% |
| Jun 2024 | 34.8% |
| Sep 2024 | 36.4% |
| Dec 2024 | 37.7% |
| Mar 2025 | 39.8% |
| Jun 2025 | 41.0% |
| Sep 2025 | 43.5% |
| Dec 2025 | 45.7% |
| Mar 2026 | 50.2% |
| Jun 2026 | 54.1% |
| Sep 2026 | 57.8% |
The annual report names four reasons for the climb in fiscal 2026: "an increased volume of shipments, a better cost structure on our newer generation products, a mix shift towards higher capacity drives and improved pricing." For the December quarter the company forecasts a margin of 60% to 61% on its adjusted basis, which leaves out stock pay and some one-time costs.
What Western Digital says about hard drive pricing
Its filings point both ways. The industry is adding output, which has pushed prices down in past cycles, while long contracts can limit how much a maker gains when prices rise.
Western Digital's annual report warns that the industry has gone through "periods of excess capacity" before, leading to "reductions in average selling prices." It also says many big customers sign long-term agreements "at predetermined or formula-based prices." Under those deals, the company says, it "may be unable to take full advantage of periods of rising prices."
Output is growing. Western Digital spent $227 million on equipment and buildings this quarter, against $73 million a year earlier. Toshiba also makes these drives. Its Philippine manufacturing unit said on October 2 that it aims to nearly double its yearly output of storage capacity. The target compares its fiscal year 2027 with fiscal 2025, the 12-month periods it reports on (Toshiba release).
Seagate's annual report lists $465 million of commitments, mostly for equipment, as it ramps up a newer recording technology (Seagate Form 10-K). These are plans and spending, and the filings do not say when the extra output reaches customers. Future reports will show whether average sales per terabyte keep rising, while telling price apart from product mix would need more detail from the company.
What Western Digital's results say about AI storage demand
Its sales growth sped up and its shipments kept rising, figures it reported after a day when investors sold AI stocks. They cover cloud customers as a whole, though, and do not single out AI.
Thursday was a rough day for anything tied to AI. The Nasdaq-100 tracks the exchange's 100 largest nonfinancial companies. By 11:42 a.m. ET, AI and chip companies made up 93% of the value it had lost, as we reported in why the Nasdaq is down today.
Western Digital's shares went down with them, closing at $354.19, 6.4% below Wednesday's close, according to StockTitan price data on its overview page. Seagate, the other big hard drive maker, closed 7.9% lower. After the results, at 4:34 p.m. ET, Western Digital's shares were little changed in after-hours trading, 0.4% below the close.
The results came out after the close. Sales growth from a year earlier rose from 25% in the December 2025 quarter, the low of the past five, to 55% now.
Show the data
| Category | Value |
|---|---|
| Sep 2025 | 27% |
| Dec 2025 | 25% |
| Mar 2026 | 45% |
| Jun 2026 | 44% |
| Sep 2026 | 55% |
| Forecast | 69% |
Shipments grew 22% from a year earlier, by our count from the company's presentations, the same pace as in June. So the faster sales growth came mostly from the money taken in per terabyte.
Chief executive Irving Tan said the company is building "an increasingly durable foundation" as it deepens customer ties and extends "our visibility into future demand." In plain terms, he means Western Digital knows more of its future orders further ahead than it used to.
The buyers are a short list. Cloud customers accounted for 88% of Western Digital's sales this quarter, and its presentation credits the growth to "cloud and AI workloads." In fiscal 2026, three customers it does not name made up 44% of its revenue, according to its annual report.
Memory chips, the faster and costlier kind of storage, have had a boom of their own, as we covered in Micron's record earnings. Reading Thursday's selloff against Western Digital's figures is our own comparison. The company did not comment on the market.
Did Western Digital beat its forecast, and what does it expect next?
Yes, by a wide gap. Sales came in $181 million above the top of the range it gave in August, and for the December quarter it forecasts sales of about $5.1 billion.
In August the company told investors to expect sales between $4.0 billion and $4.2 billion for the quarter. It reported $4.381 billion, 17% more than in the June quarter.
Show the data
| Item | Low | High | Value |
|---|---|---|---|
| Quarter to Oct 2, 2026 | $4.00B | $4.20B | $4.38B |
For the quarter to December, the company forecasts sales of $5.1 billion, plus or minus $100 million, a forecast it calls guidance. It says that would be 66% to 72% more than a year earlier, faster than any quarter in the chart above, and a company forecast can miss.
The beat is unusually wide for this company. In the five reports from July 2025 to August 2026, sales beat the top of the range four times, by $5 million to $37 million. Once they landed just inside it.
Adjusted earnings per share were $4.64, the profit divided by the number of shares, against $1.78 a year earlier and a forecast of $3.85 to $4.15. That is more than two and a half times the year-earlier figure.
Under standard accounting rules (GAAP) the figure was $4.63. That is down from $8.21 in the June quarter, which included a $2.05 billion gain on the company's leftover stake in Sandisk, its former flash memory business. A smaller Sandisk gain a year earlier is why that quarter's GAAP figure sat above the adjusted one (the table has both).
| Measure, quarter to Oct 2, 2026 | Forecast in August | Reported | A year earlier |
|---|---|---|---|
| Revenue (sales) | $4.0B to $4.2B | $4,381M | $2,818M |
| Gross margin, adjusted (non-GAAP, which leaves out stock pay and some one-time items) | 55% to 56% | 58.1% | 43.9% |
| Operating margin, adjusted (share of sales left after all running costs) | not given | 49.1% | 30.4% |
| Earnings per share, adjusted | $3.85 to $4.15 | $4.64 | $1.78 |
| Earnings per share, GAAP | not given | $4.63 | $3.07 |
| Free cash flow (cash from operations minus equipment spending) | not given | $1,377M | $599M |
Source: WD results release, October 22, 2026; forecast from the fiscal fourth quarter 2026 release, August 5, 2026.
Western Digital dividend, buybacks and debt
The company raised its dividend 17% and spent about $1 billion buying back its own shares. All of its reported debt is due within a year, and its cash is larger than that debt.
The quarterly dividend rises to $0.175 a share from $0.15, and the table has the dates. Buybacks and dividends together used about 77% of the quarter's free cash flow, the cash left after spending on equipment, by our calculation. Cash still fell, because the company also settled convertible notes, bonds that holders can swap for shares, and paid for employee stock plans (the table lists each amount). The dividend yield calculator turns a dividend and a share price into a yearly percentage.
The balance sheet shows $789 million of debt, all due within a year, against $1,314 million of cash.
Diluted shares averaged 384 million, a count that includes stock options and convertible bonds, down from June but up from a year earlier. The company has also called its last 3.00% convertible notes for early repayment in November. It expects nearly all holders to convert. It then pays cash for up to the principal (the amount borrowed) and issues shares for any value above that (redemption notice).
Show the data
| Item, quarter to Oct 2, 2026 | Amount |
|---|---|
| Quarterly dividend per share | $0.175, from $0.15; payable Dec 17, 2026, to shareholders on the books on Dec 4 (the record date) |
| Share repurchases | $1,001M |
| Dividends paid | $56M |
| Settlement of convertible notes | $570M |
| Employee stock plans, net | $317M |
| Net borrowing | $300M |
| Free cash flow | $1,377M |
| Diluted shares, GAAP | 384M (389M in the June quarter, 376M a year earlier) |
| Diluted shares, adjusted | 383M; about 380M guided for the December quarter |
| Cash and cash equivalents | $1,314M ($1,579M at July 3, 2026) |
| 3.00% convertible notes called for redemption | $109.5M principal; redemption date Nov 16, 2026; conversion window to Nov 12 |
| Debt, all due within a year | $789M ($1,052M at July 3, 2026) |
Source: WD results release, October 22, 2026.
So the dividend is rising, buybacks keep running and debt is small next to cash. All of it rests on the extra money per terabyte, which the coming reports will show holding up or not as the industry adds output.
What to watch
- The company's own split of growth into price and volume: its quarterly report (Form 10-Q), filed on results evening in past quarters
- Whether its rival reports the same pattern: Seagate's results after the market closes on Tuesday, October 27, 2026 (Seagate's announcement)
- The cash and shares the note conversions take: the window closes November 12, 2026, and the next quarterly report is where amounts settled by then would appear
How we counted
Average sales per terabyte, gross profit per terabyte and cost per terabyte divide each quarter's figures by the total exabytes Western Digital shows on page 5 of its earnings presentations. The figures are revenue, GAAP gross profit, and cost of revenue (revenue minus gross profit).
The margin chart and the per-terabyte figures cover the hard drive business only. Western Digital separated its flash memory arm into its own listed company, now Sandisk, in February 2025, and reissued its earlier figures without it.
The exabytes are 166, 190, 204, 215, 222, 231 and 248 for the quarters ended in March 2025 through September 2026. One million dollars per exabyte equals one dollar per terabyte. The exabytes are whole numbers, so each result carries up to about 0.3% of rounding.
The result is a blended average over all drives and customers. Changes in the mix of drives and customers can move it up or down, apart from any change in prices. As a check, the same arithmetic matches the rises in average selling price per exabyte the company disclosed. Those were 9% for the quarter to March 2026 in its Form 10-Q, and 8% for fiscal 2026 in its 10-K.
The split of growth multiplies 1.216 (exabytes) by 1.279 (sales per terabyte) to give 1.555, the 55% revenue growth. The forecast comparison sets each quarter's revenue against the range in the release one quarter earlier, for the six reports from July 2025 to October 2026. The 77% adds repurchases ($1,001 million) and dividends paid ($56 million) and divides by free cash flow ($1,377 million).
Frequently asked questions
Did Western Digital beat earnings expectations?
It beat its own forecast. Sales of $4.381 billion topped the $4.0 billion to $4.2 billion range it gave in August. Adjusted earnings of $4.64 a share topped its $3.85 to $4.15 range.
Why are hard drive prices going up?
At Western Digital, the company credits growth in storage shipped "and improved pricing," and its presentation credits cloud and AI workloads for the growth. The mix of drives and customers can also move its average sales per terabyte, apart from any change in prices.
Why did Western Digital stock go down today?
The shares closed 6.4% lower on October 22, 2026, before the results, on a day when AI and chip stocks led the Nasdaq down. The company did not comment on the move, and the results came out after the close.
What is Western Digital's guidance for next quarter?
For the quarter to December, the company forecasts sales of $5.1 billion, plus or minus $100 million. It also expects an adjusted gross margin of 60% to 61% and adjusted earnings of $5.80 a share, plus or minus $0.20.
Does Western Digital pay a dividend?
Yes. It raised the quarterly dividend to $0.175 a share from $0.15, payable December 17, 2026, to shareholders on the company's books on December 4. You can follow its results and filings on StockTitan's Western Digital overview page.
Sources
- WD Reports Fiscal First Quarter 2027 Financial Results (StockTitan)
- Western Digital overview (StockTitan)
- Seagate overview (StockTitan)
- Western Digital financials (StockTitan)
- WD Reports Fiscal Fourth Quarter and Fiscal Year 2026 Financial Results (StockTitan)
- Stock Market Today: AI and Chip Stocks Made Up 93% of the Value the Nasdaq-100 Lost (StockTitan)
- Micron’s Record Earnings: How Long Can the Memory Boom Last? (StockTitan)
- WD Q1 fiscal 2027 earnings presentation
- WD Q1 fiscal 2027 results release (PDF)
- WD Q4 fiscal 2026 earnings presentation
- WD Q3 fiscal 2026 earnings presentation
- Western Digital Form 10-K for fiscal 2026
- Seagate Form 10-K for fiscal 2026
- Toshiba Information Equipment (Philippines) release, October 2, 2026
- Western Digital redemption notice for its 3.00% convertible notes (StockTitan)
- Seagate results date announcement (StockTitan)
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