Western Digital stock faces test as margin momentum strengthens

Western Digital traded at 258.45 euros on Lang & Schwarz at 14:31 CET on Friday, November 6, 2026. The storage maker is entering its second fiscal quarter with strong pricing, higher-capacity drive demand and a margin outlook that remains above the first-quarter level.

A Zacks Investment Research analysis published by Yahoo Finance on Thursday, November 5, said Western Digital's non-GAAP gross margin reached 58.1% in the first quarter of fiscal 2027. That was 14.20 percentage points above the year-earlier level, with incremental margins exceeding 80%.

Pricing supports the storage cycle

The analysis attributed the improvement to a favorable product mix, stronger pricing and operational execution. Average selling price per terabyte rose 28% year over year, accelerating from growth in the high teens in the preceding quarter.

Long-term agreements with customers include contractual price increases, while spot pricing has also strengthened amid tight supply. The shift toward higher-capacity drives is supporting revenue per unit, and rising areal density is allowing Western Digital to ship more exabytes without adding the same level of fixed production costs.

For the second quarter of fiscal 2027, management expects non-GAAP gross margin of 60% to 61%. Revenue guidance stands at 5.1 billion US dollars, plus or minus 100 million US dollars, which implies 69% year-over-year growth at the midpoint.

Input costs remain a risk

The outlook is not without pressure. Higher DRAM and NAND costs could limit reductions in cost per terabyte, while management expects pricing growth to moderate eventually. The company nevertheless anticipates further increases in average selling price per terabyte over the next three to four quarters.

For investors, the key issue is whether supply tightness and the transition to higher-capacity products can sustain profitability after the sharp first-quarter improvement. Western Digital's exposure to data-center storage gives it leverage to continued cloud and artificial-intelligence infrastructure demand, but the valuation also leaves the stock sensitive to any sign that pricing or customer investment is weakening.

Investors can follow the real-time quote of Western Digital stock for further trading updates.

The broader S&P 500 market context remains relevant as investors reassess artificial-intelligence infrastructure spending and technology valuations.

Further developments are likely to center on second-quarter execution, storage pricing and the pace of adoption for higher-capacity drives. See More news and analyses on Western Digital stock.