Markets

Western Digital Grew Revenue 55%, Guided Above Consensus and Fell 6% After Hours. Deckers Lost 8%, Bloom Energy 5% and RingCentral Rose 14%

Western Digital reported fiscal first-quarter revenue of $4.38 billion, up 55%, and adjusted earnings of $4.64 a share on October 22, both above estimates, and guided the next quarter above consensus. Its shares fell about 6% after hours anyway, at the end of a day when AI-linked stocks had been sold hard.

Thursday's after-hours session showed what a beat is worth at the end of a day like Thursday. Western Digital reported fiscal first-quarter revenue of $4.381 billion, up 55% from a year earlier and above the roughly $4.14 billion expected, and adjusted earnings of $4.64 a share, up 161% and above estimates of about $4.10. Its non-GAAP gross margin was 58.1% and its operating margin 49.1%, numbers more common in software than in hard drives. It guided the December quarter to revenue of $5.0 billion to $5.2 billion and adjusted earnings of $5.60 to $6.00 a share, both above consensus, and raised its dividend 17% to $0.175 a share. The stock briefly rose in the minutes after the release and then fell about 6.3% in after-hours trading.

The explanation is in the regular session. Storage stocks are part of the AI infrastructure trade, because the data centres being built for AI need capacity as well as computing power, and that trade had just lost 6.7% in the chip index. Western Digital had fallen about 24% from its recent high going into the report, according to 24/7 Wall St. A result that would have lifted the shares in September was not enough to reverse the direction of the money on a day when the question was whether AI spending is being constrained or reconsidered.

The rest of the evening's reports split along the same line. Bloom Energy, whose fuel cells power data centres, beat with adjusted earnings of 94 cents a share and revenue of $1.24 billion and still fell about 5%. Deckers Outdoor, the maker of Hoka and Ugg, dropped about 8% after its fiscal second-quarter revenue missed and it guided full-year revenue to $5.70 billion to $5.73 billion, below consensus. VeriSign fell almost 5% after third-quarter earnings of $2.35 a share missed the $2.46 estimate, and Comfort Systems lost about 5% on a beat, after announcing that its finance chief, Bill George, will retire. The two clear winners were outside the AI trade: RingCentral rose about 14% on a revenue and earnings beat, and Omnicom gained 2% after adjusted earnings of $2.73 a share beat the $2.67 expected.

After-hours prices are set in thin trading and can reverse at Friday's open, so the first regular-session print matters more than the evening's number. But the pattern is consistent with the rest of this earnings season: the reaction depends less on the quarter than on what the market was afraid of when the release came out. On Thursday it was afraid of AI spending, and a company that sells into it was sold, beat or no beat.