What Did Western Digital’s Latest Quarter Change For Its Stock

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Western Digital (WDC) stock fell 3.0% in the session following its fiscal Q1 2027 report on October 22, 2026, while the S&P 500 slipped 0.5%. By October 27, the shares were 7.5% above their report-day close. Management expects growth to speed up, forecasting sales to be up about 69% in fiscal Q2 2027 after a 55.5% rise in the quarter just reported. So is Western Digital growing by shipping more storage, or by charging more for it?

Western Digital Grew More From Price Than Volume

During fiscal Q1 2027, Western Digital's average price per terabyte rose 28% from a year earlier, exceeding the 22% rise in the storage it shipped, measured in exabytes. That price increase has also sped up. A quarter earlier, management put it in the high teens.

Margins have climbed alongside those prices. Gross margin rose in each of the last four quarters, reaching a reported 57.8% in fiscal Q1 2027 against 43.5% in fiscal Q1 2026. Management credits a shift to higher-capacity hard disks and a favorable pricing environment.

Management expects that trend to continue. The company forecasts an adjusted gross margin of 60% to 61% in fiscal Q2 2027, compared with an adjusted 58.1% in the quarter just reported, and again points to higher-capacity hard disks and strong pricing. In management's own plan, higher prices are not a one-quarter event.

Can Western Digital Ship Storage Faster?

The company is not yet shipping storage at the pace management wants. Management targets exabyte growth above 25% a year and said the current rate sits slightly below that figure because Western Digital is between two product transitions. It said exabyte growth is at its floor now and expects the pace to speed up through the rest of the fiscal year, though management said on the October 22 call that it guides only one quarter at a time.

Management is counting on new products for that speed-up. Western Digital expects its latest drive platform to make up close to 30% of its nearline shipments by fiscal Q2 2027 and 50% by fiscal Q3. These nearline shipments represent the company's high-capacity hard disks. Western Digital is also on track to finish qualifying its first products using HAMR, the next hard-disk technology it is moving to, with two hyperscale customers in the first quarter of calendar 2027. The company plans to begin volume shipments in the first half of that year.

How Long Can Western Digital Keep Charging More?

In management's view, price per terabyte can keep rising for about three or four more quarters, given strong demand.

Further out, Western Digital has less cover. Management said the further out it looks, the less of its exabytes are covered by long-term agreements, with even less covered by the price terms in those agreements. Some costs are also rising. Western Digital uses DRAM and NAND inside its hard disks, and management said it is seeing input cost increases there. Cost per terabyte is still falling, but management expects the drop to be less than 10% from a year earlier in the near term.

If the new products face delays and price increases fade sooner than management expects, Western Digital would have to grow on shipments that are still below management's own target.

For now, prices are still rising while shipment growth has yet to reach the pace management wants. Exabyte growth from a year earlier is the figure to watch when Western Digital reports its fiscal Q2 2027 results, expected in January 2027.

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