Western Digital Announces Major Share Repurchase Amid Strong AI-Driven Growth

The data storage solutions provider Western Digital has reported second-quarter results for fiscal 2026 that significantly surpassed market forecasts. Capitalizing on the artificial intelligence revolution and robust demand from cloud service providers, the company is launching an extensive share buyback initiative while charting an ambitious course for future technological innovation. This strategic move solidifies its role as a key infrastructure partner in the global AI ecosystem.

In a decisive move to return capital to investors, Western Digital's board has approved a new share repurchase program valued at $4.0 billion, effective immediately. Chief Executive Officer Irving Tan characterized this authorization as a demonstration of confidence in the firm's standalone future prospects. Complementing this action, the corporation will distribute a quarterly cash dividend of $0.125 per share in March.

The company is also taking steps to fortify its balance sheet through the planned divestment of its remaining 7.5 million SanDisk shares. Management intends to finalize this transaction via a debt-for-equity swap by February 21, 2026, a maneuver designed to efficiently reduce corporate debt levels.

Profitability Soars on Cloud and Data Center Demand

Financial performance for the quarter was propelled by insatiable demand for storage capacity from large-scale data center operators. This surge enabled Western Digital to post revenue of $3.02 billion, marking a year-over-year increase of 25.2%. Beyond volume growth, the adoption of advanced technologies like UltraSMR contributed to a favorable product mix, driving substantial margin expansion.

Should investors sell immediately? Or is it worth buying Western Digital?

The adjusted gross margin climbed to 46.1%. Earnings on an adjusted per-share basis reached $2.13, comfortably exceeding the consensus analyst estimate of $1.93. Although shares experienced a slight decline in Thursday's trading session, the stock price of $267.99 reflects a year-to-date gain of more than 43%. This places it within 8% of its recent 52-week high, recorded in early February.

Technological Roadmap and Upbeat Guidance

Looking ahead, Western Digital is preparing for significant leaps in storage capability. The company's roadmap, leveraging HAMR (Heat-Assisted Magnetic Recording) technology, targets the future development of hard disk drives with capacities reaching 100 terabytes and beyond.

Management has issued an optimistic outlook for the ongoing third quarter of fiscal 2026. Revenue is projected to land between $3.1 billion and $3.3 billion, which would represent growth of approximately 40% compared to the same period last year. The forecast for adjusted earnings per share is set in a range of $2.15 to $2.45, underpinned by expectations of continued strong demand from the data center segment.

Key Data Points:
* Q2 Revenue: $3.02 billion (+25.2% year-over-year)
* Share Buyback: New $4.0 billion program authorized
* Tech Goal: Roadmap for 100 TB hard drive capacity
* SanDisk Divestment: Planned completion by February 21, 2026