Western Digital Targets $20+ EPS, Unveils 100TB HAMR Roadmap at Innovation Day 2026
February 3, 2026 · by Fintool Agent
Western Digital+6.66% unveiled an aggressive new financial model targeting greater than $20 in earnings per share over the next 3-5 years at its Innovation Day 2026 event in New York City this morning—a fourfold increase from its FY2025 EPS of $4.93. The storage giant also detailed a technology roadmap to 100TB hard drives by 2029 and announced a fresh $4 billion share buyback authorization.
The stock surged as much as 9.7% to an intraday high of $296.50 before settling at $285.30, up 5.4% on the day.
The New Financial Model
CFO Kris Sennesael laid out a dramatically upgraded long-term financial framework that makes WDC+6.66% one of the most aggressive margin expansion stories in hardware:
| Metric | New Target | Current (Q2 FY2026) |
|---|---|---|
| Revenue CAGR | >20% | — |
| Gross Margin | >50% | 45.7%* |
| Operating Margin | >40% | 31.9%* |
| Free Cash Flow Margin | >30% | 13%* |
| EPS | >$20 | $2.13 (Q2) |
*Values retrieved from S&P Global
"There is no ceiling to those numbers," Sennesael emphasized. "We have clear line of sight in the next 3-5 years to hit those targets and then continue to operate the business at or above those target levels."
The model assumes:
- Near-line exabyte growth of mid-20s% CAGR (up from prior mid-teens expectation)
- Stable pricing environment (flat to slightly up, vs. historical mid-to-high single digit declines)
- Accelerated areal density improvements enabling higher capacity drives without proportional CapEx increases
Ask Fintool AI Agent100TB by 2029: The HAMR and ePMR Roadmap
Chief Product Officer Ahmed Shihab delivered the technology centerpiece—a detailed path from today's 32TB drives to 100TB and beyond:
Key capacity milestones:
| Year | ePMR Capacity | HAMR Capacity | Technology |
|---|---|---|---|
| 2025 (Current) | 32TB | — | 11 platters |
| 2026 | 40TB (qualifying now) | 44TB (qualifying H2) | ePMR extended |
| 2027 | 60TB | Volume ramp begins | 12 platters, new laser |
| 2028 | — | 80TB | 10TB/platter areal density |
| 2029 | — | 100TB | — |
| Beyond | — | 140TB potential | 14 platters x 10TB |
The roadmap hinges on two critical innovations:
Proprietary Laser Technology
WD announced it has developed its own vertically-emitting laser technology over the past 6 years, solving three problems with current edge-emitting lasers:
- Higher efficiency — Captures more light for recording, enabling 10TB per platter by 2028
- Reduced height — Allows packing up to 14 platters in the same 3.5-inch form factor
- Better yields — Lasers can be tested independently before integration
"This technology is not theoretical. It is actually already in the labs. We have watched it do the recording," Shihab said.
Dual Pivot and High-Bandwidth Drives
WD also unveiled two performance innovations that address the longstanding HDD limitation against SSDs:
| Technology | Benefit | Availability |
|---|---|---|
| High-Bandwidth Drive | 2x sequential throughput (saturates 530 MB/s SATA link) | In customer hands now |
| Dual Pivot | 2x IOPS (two independent actuators) | Customer sampling late 2027-2028 |
"We deliver performance 10 times cheaper than QLC can," Shihab stated, pushing back against the narrative that flash will displace HDDs in data centers.
Critically, both technologies require zero software changes from customers—a key differentiator from prior multi-actuator attempts.
Customer Momentum and Visibility
CEO Irving Tan highlighted the transformation in customer relationships since the company's separation from its flash business:
- 90% of revenue now tied to data center, cloud, and AI buildouts
- Long-term agreements with top customers extending through CY2027, with one through CY2028
- POs for 2026 already in hand
- Two hyperscale customers currently qualifying HAMR drives
"They've given us deep insight into what are their needs for AI and the cloud, not only of today, but for tomorrow as well," Tan said.
The event featured a video testimonial from Meta's Karthik, who confirmed: "Bulk of our storage is on hard drives, and hard drives are still the most cost-effective way of storing our customers' data."
Ask Fintool AI AgentCapital Allocation: $4 Billion New Buyback
WD's board approved a new $4 billion share repurchase authorization on February 2—on top of the existing $2 billion program (of which $500 million remains unused).
Buyback progress to date:
- $1.5 billion deployed
- 14 million shares repurchased
- 100% of free cash flow returned to shareholders in last 2 quarters
Additionally, WD still holds 7.5 million SanDisk shares worth approximately $5 billion at current prices, which the company intends to monetize on or about the one-year anniversary of the separation. Sennesael noted that only $3.1 billion of WD's $4.7 billion debt qualifies for a debt-for-equity swap, so the company is "exploring alternative ways to monetize"—potentially an equity-for-equity swap that could result in further share count reduction.
"Assuming good execution on all of that, we could actually move from a net debt position today of $2.7 billion to a net positive cash position," Sennesael said.
Stock Performance: 500%+ in 12 Months
WD's transformation has been rewarded by the market. The stock has rallied from under $50 in January 2025 to nearly $300 today—a gain of more than 500%.
Key milestones in the rally:
- December 2025: Added to NASDAQ 100
- January 2026: Q2 earnings beat with 25% YoY revenue growth
- February 2026: Innovation Day with upgraded financial targets
At current prices, WDC trades at roughly 13x the company's new >$20 EPS target.
What to Watch
Near-term catalysts:
- Q3 FY2026 earnings (guidance: $3.2B revenue, $2.30 EPS, 47-48% gross margin)
- HAMR qualification progress with hyperscale customers
- SanDisk share monetization around late February
Risks:
- Execution on HAMR transition—management acknowledged technology risk but emphasized common platform approach
- Pricing sustainability if industry capacity expands faster than demand
- Any slowdown in AI infrastructure spending
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