Western Digital(US:WDC) ZACKS·2025-12-17 15:06Core Insights - Western Digital Corporation (WDC) is increasing its capital allocation plans, reflecting management's confidence in the AI-driven data storage cycle [2] - The company's focus on innovation and operational discipline positions it to capture growth opportunities from the rising demand for data storage driven by AI [3] Financial Performance - WDC reported a 27% increase in revenues to $2.8 billion for Q1 fiscal 2026, with non-GAAP operating income rising 110% year over year to $856 million and margins expanding by over 1,200 basis points to 30.4% [4][12] - The company generated $599 million in cash flow during the fiscal first quarter, supported by disciplined capital expenditures of $73 million [4][12] - As of October 3, 2025, WDC had cash and cash equivalents totaling $2 billion [4] Shareholder Returns - WDC repurchased 6.4 million shares for $553 million and paid $39 million in dividends, returning a total of $785 million to shareholders since the capital return program's launch in Q4 fiscal 2025 [5] - Following strong performance, WDC announced a 25% increase in its quarterly dividend in October 2025, indicating confidence in long-term AI-driven data growth [6] Competitive Landscape - Seagate Technology Holdings (STX) is also focusing on shareholder returns, having resumed share repurchases and increased its quarterly dividend by 3% to 74 cents per share [7][8] - NetApp (NTAP) reported $3 billion in cash and equivalents, with a strong balance sheet supporting its shareholder-friendly initiatives, returning $353 million to shareholders in Q2 fiscal 2026 [9][10] Market Performance - WDC shares have gained 14.2% in the past month, contrasting with a 1.5% decline in the Zacks Computer-Storage Devices industry [13] - The forward price/earnings ratio for WDC is currently at 20.17X, compared to the industry's 18.44X [14] - The Zacks Consensus Estimate for WDC's earnings for fiscal 2026 has been revised up by 15.3% to $7.63 over the past 60 days [15]