Western Digital reported a blowout fiscal first quarter after Thursday's closing bell, posting revenue of $4.38 billion — up 55% from a year earlier — as data-center customers kept snapping up storage drives to feed the artificial-intelligence boom, according to the company's filing with the Securities and Exchange Commission.

Non-GAAP diluted earnings per share came in at $4.64, up 161% from the same quarter last year, while non-GAAP gross margin expanded to 58.1% and operating margin reached 49.1%. The company generated $1.60 billion in operating cash flow and $1.38 billion in free cash flow for the quarter, which covered the three months ended Oct. 2. The board also raised the quarterly dividend 17%, to $0.175 per share.

Cloud customers drive the surge

The results extend a run of outsized growth tied almost entirely to hyperscale cloud operators building out AI infrastructure, which increasingly relies on massive "nearline" hard drives to store the enormous volumes of data AI systems generate and process. Cloud customers have made up the overwhelming majority of Western Digital's sales in recent quarters as data-center operators compete to secure storage capacity alongside the chips needed to run AI models.

Western Digital said it expects fiscal second-quarter revenue to rise 66% to 72% year-over-year, guidance that points to continued strength rather than a one-quarter spike. The company's own guidance heading into this report had called for roughly $4.1 billion in revenue, meaning the actual results beat its own midpoint by close to $300 million.

DEMAND FOR AI STORAGE HAS SHOWN NO SIGN OF SLOWING, EVEN AS INVESTORS GROW NERVOUS ABOUT AI SPENDING ELSEWHERE IN THE MARKET

A contrast with Thursday's broader selloff

The report landed on a rough day for the broader market: the Nasdaq Composite tumbled 2.6% to its worst session since June and the S&P 500 posted its worst day since July, both dragged down by renewed worry over how much AI companies are borrowing and spending to build out data centers, following disappointing reactions to earnings from Meta and Tesla. Western Digital's results offered a counter-narrative — that at least one corner of the AI buildout, physical storage hardware, is still running hot even as sentiment toward AI-adjacent stocks elsewhere has soured.

The storage industry has historically been cyclical, with pricing vulnerable to swings in supply, and analysts have flagged that risk even as they have raised price targets on the stock through 2026. For now, though, demand from hyperscalers shows no sign of easing.

What's next

Western Digital's full results, including segment breakdowns and management's commentary on the earnings call, are detailed in its SEC filing. The company's next quarterly report, covering the holiday-quarter period, is expected in late January.