FY2026 revenue grew 36%, margins expanded and free cash reached $3.51 billion. The 72/100 score combines strong profitability and balance-sheet results with a cyclical history, low earnings-to-cash conversion and share-count growth.
What does Western Digital do?
The company makes hard drives for hyperscalers, data centres, computers and consumer applications. Cloud contributed $11.49 billion, about 89% of FY2026 revenue. This provides exposure to AI-driven data demand while increasing dependence on large-customer orders.
What do FY2026 results show?
Revenue reached $12.92 billion, GAAP gross margin 48.9% and operating margin 34.5%. Operations generated $3.93 billion; after $418 million of capital expenditure, free cash was about $3.51 billion.
GAAP net income was $9.42 billion, but the Sandisk stake and separation-related one-offs enlarged the result; official non-GAAP net income was $3.88 billion. The model's 37% conversion therefore does not by itself mean the core business has weak cash quality.
How should the five categories be read?
Growth 44/100: FY2026 was strong, but five-year revenue CAGR is -8.9% and only three of five years grew. The separation distorts the long comparison.
Profitability 96/100: A 48.9% gross margin, 34.5% operating margin and approximate 42% return on capital are the main strengths. Durability will be tested when the cycle turns.
Cash flow 56/100: The 27.2% free-cash-flow margin is strong. One-off GAAP profit depresses conversion, so the category may understate normalised cash strength.
Balance sheet 89/100: A 1.33 current ratio, 14.3-times interest cover and net cash provide resilience. Current debt was $1.05 billion; long-term debt was eliminated.
Shareholder policy 73/100: Stock compensation was 1.6% of revenue. But the long-run share count rose 3.5% annually; FY2026 repurchases and dividends used about 75% of free cash.
Critical combinations
- Cloud growth + mass-capacity drive demand
- Rising margin + strong free cash
- Net cash + high interest cover
- Cloud concentration + large-customer dependence
- Cyclical pricing + manufacturing investment
- High cash distributions + share-count growth
What matters next?
For Q1 FY2027, guidance at the midpoint is $4.1 billion of revenue and a 55.5% non-GAAP gross margin. The long-term test is turning AI data growth into disciplined pricing while funding the higher manufacturing investment expected in FY2027.
FY2026 finances are strong, but one strong year does not remove the storage cycle. Cloud concentration, margins, investment, free cash and share count should be monitored together. This is not investment advice.
Where the figures come from
- Western Digital FY2026 Form 10-K, SEC — 53-week fiscal year ended 3 July 2026; primary source.
- Western Digital FY2026 results — the company's official annual and Q4 release.
- The SEC-based approximate P/E is not a live valuation. The Sandisk separation and one-off items unusually inflate the GAAP net-income comparison and are flagged separately.