Western Digital (WDC.N): Strong Demand Visibility, Favorable Pricing and Technology Transitions Support Sustained Upside

Citi reiterates Buy on Western Digital. WD delivered another strong quarter, reinforcing our positive view on the HDD storage cycle. Sept-quarter revenue of $4.381B (+55% yy) and EPS of $4.64 beat Street expectations of $4.144B and $4.11. Gross margins were 58.1% (+1420bps yy) and operating margins 49.1%, with 248EB shipped (+21.5% yy) and pricing up ~28% yy. F2Q27 guidance calls for sales of $5.1B +/-$100M, gross margin of 60-61% and EPS of $5.80 +/-$0.20, all well above consensus. Management highlighted robust and increasingly diversified demand across hyperscalers, enterprise customers, neocloud providers, AI frontier labs and emerging physical-AI applications. With tight industry supply, favorable pricing and technology transitions, the company expects continued margin expansion;