Western Digital Q2 2026 Earnings: Cloud Storage Demand From AI Data Centers Drives Sharp Growth
Western Digital's fiscal Q2 2026 revenue jumped 25% to $3.02B on surging AI data-center demand for high-capacity hard drives, with 2026 production capacity already sold out.
| Q2 2026 | Reported |
|---|---|
| EPS | $4.73 |
| Revenue | $3.02B |
Figures as reported by the company to the SEC for the quarter ended January 2, 2026. Analyst estimates are not part of a filing, so no comparison to expectations is shown.
Key takeaways
- Revenue rose 25% from a year earlier to $3.02 billion, and GAAP profit came in at $4.73 per diluted share. The company said both figures landed above the high end of the guidance range it had given investors last quarter.
- Growth was concentrated in Western Digital’s cloud/data-center business, which made up 89% of total revenue ($2.7 billion, up 28% year-over-year). The company shipped 215 exabytes of storage capacity to customers, up 22% from a year ago, led by demand for its highest-capacity ‘Nearline’ hard drives.
- The company generated $745 million in cash from operations and $653 million in free cash flow (cash left after funding the business), a sign it is converting sales into spendable cash rather than just paper profit.
- Margins were healthy and expanding: management specifically pointed to gross margin expansion during the quarter, and trailing-twelve-month profitability metrics on this page show wide margins, consistent with a business running at high capacity utilization amid strong pricing for high-end drives.
- Western Digital said all of its 2026 hard-drive production capacity is already sold out, with firm purchase orders locked in from its top customers through 2026 and multi-year agreements extending into 2027 and 2028 — meaning near-term output is essentially pre-committed.
- CEO Irving Tan attributed the results to “disciplined execution to meet demand in the AI-driven data economy,” tying the quarter’s strength to data centers building out AI infrastructure that needs large amounts of storage.
- For the current quarter (fiscal Q3 2026), Western Digital guided to revenue of about $3.2 billion (plus or minus $100 million), implying roughly 40% year-over-year growth, with non-GAAP gross margin expected between 47% and 48%.
- Coverage of the results noted that despite the strong numbers and above-range guidance, WDC shares fell after the report, illustrating that stock reaction can diverge from headline results.
Q2 2026 in context
| Metric | Jan 2026 | Dec 2024 | Change |
|---|---|---|---|
| Revenue | $3.0B | $2.4B | +25.2% |
| Net income | $1.8B | $594M | +210.1% |
| Free cash flow | $653M | $287M | +127.5% |
| Diluted EPS | $4.73 | $1.63 | +190.2% |
| Gross margin | 45.7% | 37.7% | +8.1 pts |
| Operating margin | 30.1% | 23.2% | +6.8 pts |
| Net margin | 61.1% | 24.7% | +36.4 pts |
Figures for the quarter ended Jan 2026 and the quarter ended Dec 2024, as reported to the SEC.
How the stock took it
Western Digital Corp closed at $278.41 on Jan 29, 2026, the last session before the report, and at $270.23 on Feb 2, 2026, the first session after it — -2.9% across the report.
| Earlier report | Close before | Close after | Change |
|---|---|---|---|
| Oct 31, 2025 | $138.13 | $158.02 | +14.4% |
| Aug 14, 2025 | $76.07 | $75.06 | -1.3% |
Closes from the market's daily record. Each figure spans the report date — from the last session that closed before it to the first that closed after — because a company may report before the open or after the close.
Sources: company report · earnings call · Yahoo Finance