Western Digital's cloud revenue rose 54% on a 28% price per terabyte, and the stock fell 7.5%
Cloud revenue rose 54 percent and the consensus was raised 21.6 percent, yet the shares keep falling. The growth is mostly price, and the profit the multiple rests on is not all from drives.
Richard Tang · 2 min read
Western Digital's+3.77% — Western Digital, up 3.77 percent today cloud business just printed the best quarter in its history, and the stock fell anyway. In fiscal Q1 2027, cloud revenue hit $3.9 billion, 88 percent of the company, up 54 percent year over year, while the December quarter was guided up about 69 percent 12. The shares still slid 7.5 percent on November 2 to $338.59, less than half their 52-week high of $799.87 3. The market is not arguing with the quarter. It is arguing with what the quarter is made of.
The revenue line is a price line
Two of Western Digital's own numbers decide the argument. Exabyte shipments rose 22 percent; the average price per terabyte rose 28 percent 1. Price, not volume, is doing most of the work in that 54 percent cloud increase 1.
That is fine while the shortage lasts. It stops being fine when supply arrives, and the company says it will: exabyte supply growth is expected to accelerate through fiscal 2027 and 2028 1, and Toshiba plans to double AI data center drive capacity 7. Seagate+3.68% — Seagate, up 3.68 percent today, which grew revenue 61 percent on the same dynamics, has already given back 30 percent in a month on exactly this fear 57. Both companies report price-led growth on a concentrated customer base, with visibility to the top seven customers but 88 to 81 percent of revenue in one end market 15.
Revenue has more than doubled in nine quarters, peaking at $4.4 billion
Data
| Revenue | |
|---|---|
| Q2 '24 | 2 |
| Q3 '24 | 2.21 |
| Q4 '24 | 2.41 |
| Q1 '25 | 2.29 |
| Q2 '25 | 2.6 |
| Q3 '25 | 2.82 |
| Q4 '25 | 3.02 |
| Q1 '26 | 3.34 |
| Q2 '26 | 3.75 |
| Q3 '26 | 4.38 |
The multiple is built on drive profit that is not all drive profit
On Trefis's arithmetic from the company's own figures, about $4.8 billion of $9.90 billion of trailing net profit came from outside the operating business 2. On operating profit alone the shares trade near 28 times earnings, not the 14.6 headline 2.
Meanwhile insiders sold $76.8 million over twelve months and bought nothing, including director Martin Cole's $1.58 million sale on October 30, even as the fiscal 2026 consensus was raised 21.6 percent 34. The de-rating has not made Western Digital cheap. It has made the operating number visible. The January print, where the price per terabyte line and the composition of net income both appear, is where this trade gets decided.
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