Western Digital Drops 5% on Q4 Revenue Miss and Lower Guidance

SAN JOSE, Calif. – Shares of Western Digital Corp. declined by 5% after the company’s fourth-quarter revenue fell short of Wall Street expectations, coupled with guidance for the first quarter of 2025 that did not meet analyst projections.

The data storage leader reported earnings of $1.44 per share for the fourth quarter, exceeding the consensus estimate of $1.16. However, its revenue of $3.76 billion for the quarter slightly missed the target of $3.74 billion. In comparison to the previous year, revenue demonstrated significant growth, rising 41% from $2.672 billion.

Looking ahead, Western Digital projects first-quarter 2025 earnings in the range of $1.55 to $1.85 per share, with the midpoint falling below the consensus estimate of $1.76. The company also anticipates revenue between $4 billion and $4.2 billion for the next quarter, which is lower than the analyst consensus of $4.23 billion.

Following the earnings announcement, analysts at Summit Insights Group downgraded the stock to a Hold rating, expressing concerns about limited further improvements to profitability. They noted, "We believe the storage industry has emerged from the cyclical downturn and is now entering a moderate supply constraint phase, prompting industry buyers to make strategic purchases to secure supply."

David Goeckeler, CEO of Western Digital, commented on the results, highlighting the company’s diverse portfolio and strategic roadmap that align with the recovery in end markets. He stated, "We are structurally improving through-cycle profitability for both Flash and HDD," and underscored the transformative period driven by the AI Data Cycle, which is anticipated to increase demand for storage solutions.

The company’s cloud revenue increased robustly by 21% quarter-over-quarter, while client revenue grew by 3%. However, consumer revenue saw a 7% decline in the same period. For the fiscal year 2024, Western Digital reported total revenue of $13 billion, representing a 6% increase year-over-year.

Despite the market’s reaction to its financial guidance, Western Digital’s financial health remains strong, ending the quarter with an operating cash inflow of $366 million and a total of $1.88 billion in cash and cash equivalents. The company’s strategic focus and technological leadership position it well to seize growth opportunities in the evolving digital landscape.