Western Digital Corporation (NASDAQ: WDC) saw its stock price climb significantly on Wednesday in response to impressive quarterly financial disclosures from fellow data storage provider Seagate Technology Holdings (NASDAQ: STX). The market's favorable reception of Seagate's results came just ahead of Western Digital's scheduled earnings report release slated for Thursday.
Seagate's latest earnings report underscores the company's strong operational performance in the second quarter, with adjusted earnings per share reaching $3.11. This figure surpassed the consensus estimate of $2.81, reflecting the company's effective management and positive market conditions. Revenue likewise exceeded expectations, totaling $2.82 billion, indicating robust demand for Seagate's products and services.
In addition to these headline numbers, Seagate disclosed a non-GAAP gross margin of 42.2%. This profitability measure highlights the company's efficiency in managing costs in relation to revenues. Cash flow generation was substantial, with operating cash flow totaling $723 million and free cash flow amounting to $607 million during the quarter. These metrics provide insight into the company's liquidity and its capacity to fund operations and investments without relying extensively on external financing.
Looking forward, Seagate provided optimistic guidance for its third-quarter outlook. It anticipates adjusted earnings per share to range between $3.20 and $3.60, notably higher than the street consensus of $2.96. Projected revenues are estimated to fall between $2.80 billion and $3.0 billion, signaling the company’s confidence in sustained demand and operational momentum.
Meanwhile, Western Digital is preparing to release its fiscal second-quarter 2026 results this Thursday. Market analysts forecast earnings per share of approximately $1.88 and revenue near $2.9 billion. If these projections hold, they would represent about 20% growth year over year at the revenue midpoint, indicating a continued expansion trajectory for the company.
In the previous quarter, Western Digital registered revenues of $2.82 billion, marking a 27% increase from the prior year’s comparable period. The company reported non-GAAP earnings per share of $1.78 and free cash flow of $599 million. These figures underscore the firm’s ability to grow revenue and maintain profitability while generating cash to support operational needs and possible strategic initiatives.
Both Western Digital and Seagate operate in a market environment benefiting from powerful industry drivers. Chief among these is the accelerated data creation prompted by artificial intelligence applications and the expanding needs of cloud services and data centers. These factors contribute to persistent demand for storage solutions that these companies specialize in.
Western Digital’s CEO, Irving Tan, has highlighted how the company’s combination of innovative technology development and disciplined business operations positions it well to harness opportunities emerging from the rapid increase in data production due to AI and related technologies. This strategic stance aligns with sector trends that are supporting revenue and earnings growth for key players.
The encouraging financial results from Seagate serve as a bellwether for favorable conditions throughout the storage industry. Given these circumstances, expectations are elevated for Western Digital’s upcoming earnings report to reflect similar positive trends, particularly in segments involving high-capacity drives and margin improvements.
Following the news of Seagate’s financial outperformance, Western Digital’s share price responded with a notable increase, reaching a 52-week high of $283.55 at the time of Wednesday’s market close—a gain of approximately 12.23%. This price movement indicates investor optimism about Western Digital’s prospects in light of the sector’s current dynamics.
In summary, the latest data from Seagate Technology sets a strong precedent just ahead of Western Digital's earnings announcement. Both firms are leveraging the expanding demand for data storage solutions driven by AI and cloud computing trends, and Western Digital appears poised to capitalize on the ongoing positive momentum within the industry.