Shares of Western Digital Corporation (NASDAQ: WDC) experienced fluctuations following the release of its second-quarter financial results, which surpassed expectations, and the issuance of optimistic third-quarter guidance on Thursday.
The company reported adjusted earnings per share of $2.13, exceeding the consensus estimate of $1.92. Revenue for the quarter reached $3.01 billion, also above the anticipated $2.92 billion. Western Digital attributed its strong performance to disciplined operational execution in response to demand driven by the AI-focused data economy. The gross margin expanded, with GAAP gross margin reported at 45.7% and non-GAAP gross margin at 46.1%.
Additionally, Western Digital generated $745 million in cash flow from operations and reported $653 million in free cash flow, with over 100% of the free cash flow returned to shareholders through dividend payments and share buybacks. CEO Irving Tan remarked on the company’s effective execution to meet customer demand for reliable, high-capacity hard disk drives, reinforcing the confidence the company has observed from clients in the AI-driven sector.
Looking ahead, Western Digital expects its third-quarter adjusted earnings per share to fall between $2.15 and $2.45, significantly higher than the consensus estimate of $1.96. The anticipated revenue for the next quarter is projected to be between $3.10 billion and $3.30 billion, outperforming the consensus of $2.95 billion.
Despite these positive financial results, shares fell by 4.27%, trading at $266.53 at the time of the report.
Why this story matters:
- Reflects the company’s strong positioning in the growing AI data economy.
Key takeaway:
- Western Digital’s strong financial performance and positive forecast indicate robust demand for its products.
Opposing viewpoint:
- Market reaction shows concerns about sustainability of performance despite favorable results.
