WD CEO Irving highlighted strong Q4 fiscal 2026 financial results and emphasized robust, growing demand for high-capacity hard drives driven by hyperscalers, cloud providers, and AI applications, with a focus on increasing data density rather than unit volume. He underscored the critical role of hard drives in AI and cloud storage, long-term customer agreements through 2029 and beyond, and WD’s commitment to innovation and reliability to support the expanding exabyte-scale storage needs.
In the recent discussion with WD CEO Irving, the company reported strong financial results for Q4 of fiscal 2026, including over 40% revenue growth and gross margins above 54%. Despite some pressure on the stock and high market expectations regarding the supply of exabytes, the CEO emphasized that the fundamentals for continued revenue growth, margin expansion, and cash flow generation remain robust. Demand from hyperscalers, new cloud providers, and AI applications continues to grow at a compound annual growth rate (CAGR) of over 25% for the next five years, supported by a solid supply roadmap.
Irving highlighted the distinct nature of storage compared to memory markets like DRAM. Unlike memory, which is frequently recycled, data stored on hard drives accumulates over time, driving sustained demand for storage capacity. To meet this demand, WD is focusing on technological advancements rather than increasing the number of hard drive units produced. The company is enhancing the data density of its drives, moving from shipping 32-terabyte drives to introducing 40-terabyte drives, thereby increasing capacity by over 30% without expanding unit volume.
The engineering behind these high-capacity drives is complex, involving sophisticated media and head design that utilizes a significant portion of the periodic table. WD works closely with customers to ensure rigorous qualification processes, as reliability and data integrity are critical. This collaboration ensures that customers can integrate the new generation of hard drives into their infrastructure with confidence, maintaining the quality standards required for large-scale AI and cloud storage applications.
Long-term agreements (LTAs) are a key part of WD’s strategy, with contracts currently locked in through 2029 and ongoing negotiations for 2030 and 2031. Customers have clear visibility into their future storage needs as they plan their entire AI infrastructure stacks, including GPUs, CPUs, and various memory types. While WD is committed to delivering the required exabyte-scale storage, pricing models for these long-term deals are still being developed, potentially involving base prices combined with tiered pricing structures based on volume.
Finally, Irving expressed enthusiasm about the renewed importance of hard disk drives in the AI era. Despite perceptions that hard drives might be outdated, they remain fundamental to cloud and AI storage, accounting for 80% of all storage in these environments. This resurgence presents both a significant challenge and a unique opportunity for WD to lead the industry in supporting AI’s explosive growth, underscoring the company’s responsibility to innovate and deliver cutting-edge storage solutions.