Western Digital (WDC) 2026 Evercore Global TMT Conference summary

Data growth and industry trends

• Exabyte data storage growth is expected to exceed 25% CAGR over the next three to five years, driven by cloud usage, AI model training, and physical AI applications like robotics and autonomous vehicles.

• AI workloads, including multimodal models and inferencing, are significantly increasing storage requirements, with most data still stored on hard disk drives.

• Synthetic data generation is supplementing real-world data to meet the needs of AI training, further fueling storage demand.

Technology and capacity roadmap

• Both HDD and SSD segments are experiencing strong growth, with 80% of hyperscaler data stored on HDDs.

• Capacity increases are being achieved through higher-capacity drives, with current shipments averaging 23TB and new products reaching up to 44TB; a roadmap exists for drives exceeding 100TB.

• No need to add unit capacity; technology transitions support exabyte growth.

Pricing, cost, and margin dynamics

• Shift to value-based pricing as higher-capacity drives deliver more value, resulting in a 9% year-over-year increase in ASP per terabyte.

• Cost per terabyte is expected to decline about 10% annually over the mid-to-long term, creating a win-win for both customers and the company.

• Gross margins have surpassed 50% and incremental gross margins are in the 70%-75% range, driven by rising ASP and falling costs.