Western Digital reported fiscal first-quarter revenue of $4.38 billion, up 55% year over year and ahead of the $4.14 billion consensus, while non-GAAP earnings per share reached $4.64, beating the $4.11 estimate. The company guided for fiscal second-quarter revenue of roughly $5.1 billion and adjusted EPS of $5.80, well above the just-reported quarter.
Despite the strong print, memory stocks sold off Thursday: Sandisk fell 8.51% to $1,260.93, Western Digital dropped about 7%, and Micron declined around 6%. The Roundhill Memory ETF lost 7%, far worse than the Invesco QQQ Trust's 2.77% decline, indicating sector-specific pressure. On Friday, Sandisk recovered 1.54% to $1,280.30 and Western Digital rose 1.06%.
Analysts offered mixed reactions. Morgan Stanley raised its Western Digital price target to $668 and stayed Overweight, calling the results a "strong, pricing-driven beat." UBS lowered its target to $435 and kept Neutral, citing higher capital expenditures, accelerating industry supply, and demand uncertainty. Citi maintained a Buy rating while reducing its price target on valuation multiples, and Goldman Sachs flagged near-term capex and potential competitor capacity increases as reasons the stock could trade modestly lower.
Western Digital management said AI infrastructure spending is supporting demand and pricing, with blended average selling price per terabyte up 28% in the quarter. CEO Irving Tan said demand is extending beyond traditional customers to neocloud providers and AI frontier labs, with visibility through 2030 or 2031 across the company's seven largest customers. The company also increased its quarterly dividend by 17% to 17.5 cents per share.
Concerns include Chinese memory competition, particularly around DRAM from CXMT, though Sandisk primarily makes NAND flash. Mizuho reiterated an Outperform rating on Sandisk, arguing flash pricing should hold because capacity outside China is expected to remain largely unchanged. Sandisk reports its own fiscal first-quarter results on October 29.
