Western Digital's stock experienced a 6.8% plunge in after-hours trading on Thursday, following the release of the company's fiscal third-quarter financial results which showed strong performance driven by artificial intelligence demand.
The data storage maker reported quarterly adjusted earnings of $2.72 per share, beating analyst estimates of $2.39, while revenue climbed 45% year-over-year to $3.34 billion, also surpassing expectations. The company attributed its performance to innovation, execution, and AI-driven demand for storage solutions, with CEO Irving Tan noting that "virtually every AI workload creates data that is stored persistently and cost-efficiently on HDDs."
Despite the earnings beat and strong outlook, investors engaged in profit-taking following the stock's massive rally over the past year. Western Digital shares had soared approximately 900% over the past 12 months and were up more than 150% year-to-date before the earnings report, creating what analysts described as a "sell-the-news" reaction as the results failed to provide the "wow factor" needed to sustain the breakneck momentum. The decline also reflected broader concerns about high valuations in the memory and storage sector amid supply constraints and questions about the sustainability of the AI capital expenditure cycle.
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