Western Digital (WDC) Bank of America 2026 Global Technology Conference summary

Market and industry trends

• Exabyte growth projections have increased from mid-teens to well above 25% CAGR for the next 3–5 years, driven by cloud and AI workloads, including training and inferencing for large language models and physical AI applications.

• Data storage demand is outpacing supply, with industry analysts expecting a tight demand-supply environment for several years.

• The business has shifted from consumer/client PC focus to 90% revenue from hyperscalers, providing longer-term visibility and reducing cyclicality.

• Customers are placing orders up to 52 weeks in advance, with some seeking agreements extending to 2032, enhancing predictability.

• Storage demand is increasingly decoupled from compute CapEx, as data storage compounds while compute cycles are reused.

Technology and product roadmap

• Roadmap includes shipping 32TB drives, qualifying 40TB ePMR and 44TB HAMR drives, with plans to reach 50–100+TB in coming years.

• Focus on increasing areal density per platter and adding more platters per drive to lower cost per terabyte and boost value.

• Both ePMR and HAMR technologies are being advanced in parallel, with ePMR ramping in 2026 and HAMR in 2027.

• Technology improvements are expected to support exabyte growth without significant unit capacity expansion.

Pricing, contracts, and financial performance

• Pricing is value-based, with mid to high single-digit increases in price per terabyte year-over-year; ASP per terabyte was up 9% YoY in March.

• Long-term agreements with hyperscalers provide mutual visibility on demand and pricing, while enterprise and consumer segments allow for more pricing discretion.

• Gross margins have reached the low 50% range, with incremental margins in the 70–75% range, driven by higher capacity drives and cost efficiencies.

• Strong discipline in pricing and capacity management, with no plans for unit capacity expansion CapEx.