Western Digital beats expectations as nearline HDD demand accelerates; J.P. Morgan favors TDK
Western Digital’s fourth-quarter fiscal 2026 sales for April through June reached $3.75 billion, up 44% from a year earlier and 12% sequentially.
Western Digital’s fourth-quarter fiscal 2026 sales for April through June reached $3.75 billion, up 44% from a year earlier and 12% sequentially. Its non-GAAP gross margin was 54.4%. Both figures exceeded Bloomberg consensus estimates.
For the first quarter of fiscal 2027, covering July through September, Western Digital guided to sales of $4.1 billion and a 55.5% gross margin, again above expectations. Nearline HDD shipment capacity totaled 209 exabytes, up 23% year over year, while cloud customers accounted for 89% of revenue.
More importantly, Western Digital is in discussions with multiple customers about long-term agreements covering 2029 through 2031. Management expressed strong confidence in the demand outlook. The next-generation 40-terabyte ePMR HDD has begun shipping, while 44-terabyte HAMR is scheduled to ship in the first half of 2027, providing a clear technology road map.
J.P. Morgan identified TDK, listed as 6762.T, as its preferred HDD-related stock. The note says TDK could gain market share because branded-drive manufacturers are restraining expansion of HDD-head production capacity.
The source’s conclusion is that Western Digital’s strong results and above-consensus guidance validate a structural surge in nearline HDD demand. It says the upcoming mass production of 44-terabyte HAMR and long-term agreements extending through 2031 could support continued strength across the industry, with TDK positioned as a key potential beneficiary of higher HDD-head market share and a potential “Davis double.”
The source characterizes the developments as favorable for TDK, Western Digital, and Japan’s electronic-components and HDD supply chains. It says some of Western Digital’s current performance is already reflected in its share price, while TDK’s potential market-share gains may not yet be fully reflected in its valuation.
Key catalysts identified in the note are: whether Western Digital’s actual first-quarter fiscal 2027 results exceed its guidance; the progress of full-scale 40-terabyte ePMR production and customer adoption; progress toward 44-terabyte HAMR shipments in the first half of 2027; progress on signing long-term agreements covering 2029 through 2031; and data confirming gains in TDK’s HDD-head market share.
For the first quarter of fiscal 2027, covering July through September, Western Digital guided to sales of $4.1 billion and a 55.5% gross margin, again above expectations. Nearline HDD shipment capacity totaled 209 exabytes, up 23% year over year, while cloud customers accounted for 89% of revenue.
More importantly, Western Digital is in discussions with multiple customers about long-term agreements covering 2029 through 2031. Management expressed strong confidence in the demand outlook. The next-generation 40-terabyte ePMR HDD has begun shipping, while 44-terabyte HAMR is scheduled to ship in the first half of 2027, providing a clear technology road map.
J.P. Morgan identified TDK, listed as 6762.T, as its preferred HDD-related stock. The note says TDK could gain market share because branded-drive manufacturers are restraining expansion of HDD-head production capacity.
The source’s conclusion is that Western Digital’s strong results and above-consensus guidance validate a structural surge in nearline HDD demand. It says the upcoming mass production of 44-terabyte HAMR and long-term agreements extending through 2031 could support continued strength across the industry, with TDK positioned as a key potential beneficiary of higher HDD-head market share and a potential “Davis double.”
The source characterizes the developments as favorable for TDK, Western Digital, and Japan’s electronic-components and HDD supply chains. It says some of Western Digital’s current performance is already reflected in its share price, while TDK’s potential market-share gains may not yet be fully reflected in its valuation.
Key catalysts identified in the note are: whether Western Digital’s actual first-quarter fiscal 2027 results exceed its guidance; the progress of full-scale 40-terabyte ePMR production and customer adoption; progress toward 44-terabyte HAMR shipments in the first half of 2027; progress on signing long-term agreements covering 2029 through 2031; and data confirming gains in TDK’s HDD-head market share.