Why Did Western Digital Stock Crash After Earnings?

Western Digital (WDC) dropped 11.7% after reporting fiscal fourth-quarter results that beat expectations across the board. The hard drive and flash memory manufacturer posted earnings of $3.56 per share on revenue of $3.75 billion, with sales climbing 44% year-over-year and GAAP earnings surging 1,125%, powered by AI-driven demand for computer memory.

The selloff came despite management guiding first-quarter fiscal 2027 sales growth of 42-49%, well above Wall Street's consensus. The disconnect between strong fundamentals and price action suggests traders took profits after a sharp run-up into the print or repositioned on valuation concerns despite the AI tailwind.

The quarter underscores Western Digital's exposure to data center buildouts supporting generative AI workloads, which require massive storage capacity. The company's hard disk drives and NAND flash products directly benefit from hyperscaler infrastructure spending.