Western Digital Corp. (WDC) First Take Solid results and roughly in line guidance, set against elevated expectations

Equity Research 5 August 2026 | 4:13PM EDT

Western Digital Corp. (WDC): First Take: Solid results and roughly in-line guidance, set against elevated expectations

Key stock takeaways: We expect the stock to trade lower following a strong quarter, James Schneider, Ph.D. | with margin/EPS guidance roughly in line the Street. We believe investor Goldman Sachs & Co. LLC expectations were very elevated given growing confidence in continued pricing and Khalil Fenina margin momentum in HDDs and long-term visibility into volume commitments and | price increases given strong hyperscaler CapEx plans. We expect investors to focus Goldman Sachs & Co. LLC

on critical elements of management’s commentary on the conference call, including Anmol Makkar | (1) order and forward pricing trends; (2) duration of HDD demand visibility; (3) HDD Goldman Sachs & Co. LLC unit supply expectations. Luya You | Quarterly revenue in line with the Street, with margins above: Western Digital Goldman Sachs & Co. LLC reported revenue of $3.75 bn, in line with GS at $3.76 bn and the Street at $3.71 bn (Visible Alpha Consensus Data), while gross margin of 54.4% was above GS at 52.4% and the Street at 51.9%. Non-GAAP EPS of $3.56 was above GS at $3.43 and the Street at $3.35.

3Q revenue and EPS guidance is roughly in line with the Street. Western Digital guided 3Q roughly in line with the Street on revenue, but above on gross margin. Revenue was guided to $4.10 bn at the midpoint, which is in line with GS at $4.17 bn and the Street at $4.04 bn. Gross margin was guided to 55% - 56%, above GS at 54.1% and the Street at 54.0%. Non-GAAP EPS guidance of $3.85 - $4.15 (midpoint of $4.00) was slightly above GS at $3.94 and the Street at $3.80.

Price target. Our price target of $650 is based on a 23X P/E multiple applied to our normalized EPS of $28.00. Key upside/downside risks: (1) any pull-in of the company’s HAMR roadmap; (2) new consumer/enterprise storage applications; (3) multiple compression due to industry overshipping end-demand; (4) any signaling of HAMR roadmap push outs or incremental technical challenges.

Exhibit 1: WDC - Variance summary 2Q26 Financials ($ mn, except EPS) Actual GS Street Actual/GS Actual/Street Total Revenue 3,747 3,763 3,714 -0.4% 0.9% QoQ 12.3% 13% 11.3% YoY 43.8% 44% 42.6% Gross Margin 54.4% 52.4% 51.9% +201 bps +251 bps Operating Margin 44.2% 41.6% 41.4% +259 bps +282 bps Non-GAAP EPS $3.56 $3.43 $3.35 3.9% 6.3%

Source: Company data, Goldman Sachs Global Investment Research, Visible Alpha Consensus Data

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Western Digital Corp. (WDC)

Exhibit 2: WDC - Guidance summary vs GS prior and Street estimates 3Q26E Financials ($ mn, except EPS) High Low Guidance (midpoint) GS Street Guidance/GS Guidance/Street Total Revenue 4,200 4,000 4,100 4,166 4,040 -1.6% 1.5% QoQ 9.4% 11% 21.1% YoY 45.5% 48% 55.1% Gross Margin 56.0% 55.0% 55.5% 54.1% 54.0% +140 bps +148 bps Non-GAAP EPS $4.15 $3.85 $4.00 $3.94 $3.80 1.4% 5.3%

Source: Company data, Goldman Sachs Global Investment Research, Visible Alpha Consensus Data

WDC 12m Price Target: $650.00 Price: $548.56 Upside: 18.5%

Neutral GS Forecast 6/25 6/26E 6/27E 6/28E Market cap: $202.4bn Revenue ($ mn) 13,279.0 12,934.8 18,893.6 23,482.7 Enterprise value: $199.2bn EBITDA ($ mn) 3,286.0 4,896.4 8,982.0 12,070.0 3m ADTV: $4.7bn EBIT ($ mn) 2,835.0 4,524.4 8,598.0 11,686.0 United States EPS ($) Americas Semiconductors & IT P/E (X) Services EV/EBITDA (X) M&A Rank: 3 FCF yield (%) 8.4 2.9 3.4 5.0 Dividend yield (%) 0.2 0.1 0.1 0.1 Net debt/EBITDA (X) 0.8 (0.7) (0.9) (1.2)

3/26 6/26E 9/26E 12/26E EPS ($)

Source: Company data, Goldman Sachs Research estimates, FactSet. Price as of 4 Aug 2026…