Western Digital stock plummets despite earnings beat

Western Digital's stock experienced a sharp decline, dropping nearly 11% in after-hours trading on Wednesday. This occurred even as the hard-drive manufacturer announced fourth-quarter adjusted earnings per diluted share of $3.56, a significant increase from $1.70 in the prior year, and revenue that rose to $3.75 billion from $2.61 billion.

Despite surpassing analyst expectations for both earnings and revenue, the market reacted negatively. The company's forecast for the first quarter of fiscal 2027 indicated an expected revenue of $4.1 billion, with adjusted earnings per share projected between $3.85 and $4.15. This guidance, while modestly above consensus, did not seem to satisfy investor expectations for continued growth within the AI infrastructure sector.

Retail traders on Stocktwits expressed confusion over the steep selloff, with many deeming the nearly 11% drop unwarranted following a comprehensive earnings beat. Sentiment among these traders shifted to 'bullish' as message volume increased, with some attributing the stock's movement to technical factors and algorithmic trading rather than fundamental performance.