Western Digital’s Capacity Fully Booked Through 2026 Amid AI Demand Surge

Western Digital has delivered a standout quarterly performance, fueled by the structural demand from artificial intelligence. The data storage giant's latest results not only surpassed market expectations but revealed a remarkable forward-looking indicator: its production capacity for nearline storage is fully allocated through the end of the 2026 calendar year.

For its second fiscal quarter of 2026, which concluded on January 2, the company posted revenue of $3.02 billion. This figure represents a substantial 25 percent year-over-year increase. Earnings per share also came in strong at $2.13, comfortably exceeding the analyst consensus estimate of $1.93. A key highlight of the report was a significant expansion in profitability, with the gross margin rising by 770 basis points to reach 46.1 percent.

This robust growth is being powered almost entirely by the cloud segment, which now accounts for 89 percent of total company revenue. Demand for storage solutions from data centers and AI applications reached such a level that Western Digital shipped 215 exabytes of capacity during the quarter. Despite these powerful figures, the share price experienced a modest pullback in after-hours trading.

Market analysts attribute the approximate three percent decline to routine profit-taking, noting the equity had already surged more than 60 percent during the month of January alone. Even with this slight retreat, shares remain near recent highs, trading at $268.00 and within close range of the 52-week peak of $279.76.

Should investors sell immediately? Or is it worth buying Western Digital?

Unprecedented Forward Demand and Technological Acceleration

Management provided an optimistic outlook for the upcoming quarter, forecasting revenue in the range of $3.1 billion to $3.3 billion. This confidence is underpinned by the extraordinary fact that its manufacturing slots for nearline storage drives are completely booked for the remainder of the 2026 calendar year.

Concurrently, the company is accelerating the rollout of next-generation technology. The qualification process for its Heat-Assisted Magnetic Recording (HAMR) technology with a major hyperscale customer commenced in January 2026—approximately six months ahead of the original schedule. HAMR is viewed as a critical innovation for substantially increasing storage density within data center environments.

Western Digital's experience confirms a sector-wide trend highlighted earlier in the week by competitor Seagate Technology: the structural need for massive storage capacity, driven by the AI wave, shows no signs of abating.

For its third fiscal quarter, the company anticipates earnings per share to land between $2.15 and $2.45. Shareholders can also look forward to the next dividend payment of $0.125 per share, which is scheduled for payout on March 18, 2026.