Key TakeawaysShares of Western Digital fell approximately 15% in pre-market trading despite surpassing earnings projections for both EPS and revenueThe company reported adjusted EPS of $3.56, beating the Street estimate of $3.31, while revenue reached $3.75 billion, marking a 42% year-over-year increaseForward guidance for Q1 FY2027 exceeded consensus but indicated slowing sequential momentumPrior to earnings, WDC shares had already surged 201% year-to-date, creating elevated expectationsProjected gross margins of 55-56% lagged behind competitor Seagate’s 57%+ outlookDespite delivering robust fiscal Q4 2026 results, Western Digital failed to win over investors. Shares tumbled approximately 15% during pre-market hours Thursday following a report that exceeded expectations on multiple metrics.Western Digital Corporation, WDCThe dramatic selloff came after an impressive 201% rally throughout 2026. Such an extraordinary advance inevitably raises the threshold for what constitutes good news.The company delivered adjusted earnings per share of $3.56, surpassing analyst projections of $3.31. Revenue totaled $3.75 billion, representing a 44% jump from the prior year and exceeding the $3.69 billion consensus forecast.$WDC (Western Digital) #earnings are out: pic.twitter.com/UwxUaSzTog— The Earnings Correspondent (@earnings_guy) August 5, 2026Chief Executive Officer Irving Tan highlighted the company’s achievements, noting that “revenue increased 44% year over year, gross and operating margins expanded, and earnings per share more than doubled.”Chief Financial Officer Kris Sennesael described fiscal 2026 as “an outstanding year for WD, characterized by broadening demand, deeper customer engagement, and disciplined execution across all end markets.”Forward Outlook Disappoints MarketLooking ahead to Q1 FY2027, Western Digital provided earnings guidance of $3.85 to $4.15 per share alongside revenue projections of $4.00 billion to $4.20 billion. Both metrics exceeded analyst expectations.However, the problem lay in the pace of growth. The forecast suggested a deceleration in sequential improvements across key financial metrics including revenue, profitability margins, and bottom-line earnings.Market participants who had anticipated continued aggressive expansion found the outlook underwhelming. Simply exceeding estimates proved insufficient when the growth momentum appeared to be moderating.The company’s gross margin forecast of 55% to 56% also drew scrutiny when measured against competitor Seagate, which issued guidance last week suggesting margins exceeding 57% for the upcoming quarter.Management explained that part of the margin differential stems from contract timing issues. Legacy long-term pricing agreements are expiring, with newly negotiated higher-priced contracts expected to take effect subsequently.Additional Market FactorsEven before the earnings announcement, shares had declined 5.4% during regular trading hours, suggesting mounting investor anxiety ahead of the report.Broader market conditions couldn’t be blamed for the weakness. Major indices including the S&P 500, Dow Jones Industrial Average, and Nasdaq Composite all registered modest gains during Thursday’s session.Corporate insider activity also raised concerns. Throughout the three-month period preceding the earnings release, company insiders disposed of roughly $13.7 million worth of shares without any offsetting purchases.SanDisk coincidentally released its own earnings report after market close the same day. Additionally, SK Hynix and SanDisk jointly announced a new High Bandwidth Flash standard at an industry event, potentially intensifying competitive dynamics in the storage sector.Prior to Thursday’s downturn, WDC reached a 52-week peak of $799.87. The after-hours selloff drove shares down to approximately $441.70, representing a nearly $77 decrease from the previous closing price.The post Western Digital (WDC) Stock Plunges 15% Despite Strong Earnings Beat appeared first on Blockonomi.