Western Digital's Q4 Earnings Ahead: Key Trends Investors Should Watch

Western Digital Corporation (WDC) is slated to release fourth-quarter fiscal 2025  results on July 30, after the closing bell. The Zacks Consensus Estimate for earnings has remained unchanged over the past 60 days at $1.47, suggesting a growth of 2% from the prior-year quarter. Management projects non-GAAP earnings of $1.45 (+/- 20 cents). The consensus estimate for revenues is currently pegged at $2.45 billion, suggesting a 34.8% decline from the prior-year quarter’s figure. The company expects non-GAAP revenues of $2.45 billion (+/- $150 million). The company's earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average surprise of 7.3%. Shares of WDC have gained 3.6% over the past year against a 12.6% decline in the Zacks Computer-Storage Devices industry.Image Source: Zacks Investment ResearchPrimary Catalysts & Risks for WDC’s Q4 EarningsWestern Digital’s fiscal fourth-quarter performance is likely to have benefited from continued strong demand from cloud service providers, fueling nearline HDD and NAND capacity purchases. In the fiscal third quarter, cloud accounted for 87% of total revenues, reaching $2 billion, up 38% year over year. Broad investments from hyperscale cloud/data center customers remain a tailwind.Its 11-disk drives, offering up to 26TB (CMR) and 32TB (Ultra SMR), are rapidly ramping up, with more than 800,000 units shipped in the fiscal third quarter, and more than 1 million expected for the June quarter. Management is working closely on HAMR technology with two hyperscale customers and continues to receive positive and encouraging feedback on its drives. Long-term agreements are now in place with two major customers through mid-2026. Considering these factors, WDC anticipates sequential revenue growth in the fiscal fourth quarter, driven by strong data center demand.Management expects the rise of generative AI-driven storage deployments to lead to a client and consumer device refresh cycle and increase content growth in smartphones, gaming, PCs and consumer devices over the long term. Growing AI adoption is likely to boost storage demand across both HDD and Flash at the edge and core, creating many business opportunities. To expand its Flash business further, the company has established a separate entity, Sandisk.Western Digital Corporation Price and EPS Surprise Western Digital Corporation price-eps-surprise | Western Digital Corporation QuoteHowever, the ongoing macroeconomic volatility and uncertainty caused by the damaging impact of levying tariffs and escalating global trade conflicts are likely to weigh on its performance in the to-be-reported quarter by creating further cloud demand fluctuations in areas such as the enterprise segment and parts of its distribution and retail business.To address these changing macroeconomic and geopolitical challenges, Western Digital has outlined strategies. In the short term, it has assembled cross-functional teams to minimize disruptions and reduce the impact of tariffs on customers and operations. At the same time, management is adopting a disciplined approach by evaluating the long-term effects of supply chain adjustments to stay agile, resilient and prepared for the future. Despite broader uncertainties, demand from hyperscale customers remains strong amid a constrained supply situation.Also, rising expenditures are likely to weigh on its margins. For the fiscal fourth quarter, WDC expects operating expenses to rise slightly sequentially to $330–$340 million due to higher variable pay, new hires post–flash business spinoff and more R&D investments.Key Recent DevelopmentsIn May 2025, Western Digital drove a new era of storage innovation by advancing infrastructure solutions tailored for AI/ML, software-defined storage and disaggregated storage. With a focus on hyperscale cloud service providers, enterprises and Storage-as-a-Service vendors, the company’s Platforms Business delivers both high-capacity JBODs (Just a Bunch of Disks) and high-performance EBOF (Ethernet Bunch of Flash) NVMe-oF solutions to power intensive data workloads.Western Digital teamed up with Ingrasys, a subsidiary of Foxconn Technology Group, to transform the way storage and networking are deployed at scale. The initiative aims to engineer a Top-of-Rack (TOR) Ethernet Bunch of Flash (EBOF) switch with embedded storage—a new frontier in fabric-attached, disaggregated infrastructure designed to meet the surging data demands of AI and high-performance workloads.Western Digital boosted shareholder value by launching a new $2 billion share buyback program in May, highlighting its strong capital allocation strategy focused on long-term returns for investors.WDC’s Earnings WhispersOur proven model does not conclusively predict an earnings beat for Western Digital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.Western Digital presently has an Earnings ESP of 0.00% and a Zacks Rank #1. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.Stocks With the Favorable CombinationHere are three stocks you may want to consider, as our model shows that these have the right elements to post an earnings beat in this reporting cycle.Emerson Electric Co. (EMR), expected to release earnings on Aug. 6, currently has an Earnings ESP of +0.46% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.The consensus estimate for Emerson Electric’s earnings for the third quarter of fiscal 2025 is pegged at $1.51 per share, indicating year-over-year growth of 5.6%. EMR has a trailing four-quarter average surprise of 3.4%.Illinois Tool Works Inc. (ITW), slated to release second-quarter 2025 results on July 30, has an Earnings ESP of +1.19% and a Zacks Rank of 3 at present.The Zacks Consensus Estimate for Illinois Tool Works’ second-quarter 2025 earnings is pegged at $2.56 per share, suggesting a year-over-year rise of 0.8%. ITW has a trailing four-quarter average surprise of 3%.QUALCOMM Incorporated (QCOM) has an Earnings ESP of +0.60% and a Zacks Rank #3. It is scheduled to report quarterly figures on July 30. The Zacks Consensus Estimate for QCOM’s to-be-reported quarter’s earnings and revenues is pegged at $2.68 per share and $10.36 billion, respectively. QCOM has a trailing four-quarter average surprise of 6.4%.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the favorite stock to gain +100% or more in the months ahead. 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(EMR): Free Stock Analysis Report Western Digital Corporation (WDC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks