<p>Thanks to the "scissors effect" of price increases and declining costs, Western Digital's gross margin soared to 46.1%, with incremental gross margin expectations reaching 75%. CEO Irving Tan revealed that capacity for 2026 is already sold out, and long-term contracts have been signed with three of the top five customers until 2027-2028. Irving Tan emphasized that AI inference applications will drive structural growth in HDD demand, as the inference process generates massive new data that needs to be stored at low cost</p>

- On January 29, Western Digital reported a strong Q2 2026 financial performance with revenues of $3.02 billion and adjusted earnings per share of $2.13, exceeding market expectations.  
- Despite these positive results, the stock price fell nearly 3% due to profit-taking after a 60% surge in January, along with concerns over capacity limits and pricing power.  
- The CEO revealed that all 2026 capacity is sold out and long-term contracts have been secured with key clients extending into 2028, indicating strong future demand for HDD solutions amid rising AI-driven storage needs.

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Western Digital

Western Digital conference call: 2026 production capacity sold out, long-term contracts signed until 2028, AI inference is reshaping the HDD valuation system