Western Digital (WDC) shares tumbled 11.97% in a 24-hour plunge, as the data-storage giant's fiscal fourth-quarter results and forward guidance—despite surpassing Wall Street estimates—failed to meet the elevated expectations of investors who had bid the stock up more than 200% year-to-date on artificial-intelligence optimism.

The company reported adjusted earnings of $3.56 per share on revenue of $3.75 billion for the quarter ended July 3, both comfortably above analyst consensus estimates of $3.31 and $3.69 billion, respectively. Net income surged more than twelvefold year-over-year to $3.2 billion. However, the first-quarter guidance calling for revenue of approximately $4.1 billion and adjusted EPS of $4.00 at the midpoint—only modestly ahead of consensus—was not enough to justify the stock's stretched valuation. Investors had priced in a much stronger beat, and the relatively in-line outlook triggered aggressive profit-taking across the post-market and overnight sessions.

The selloff was compounded by a broader rotation out of high-flying AI storage names, as traders locked in gains following a massive run-up. Western Digital's guidance also paled in comparison to the more impressive outlook delivered by rival Seagate Technology the prior week, further highlighting that the market's bar for AI-driven storage plays has been set exceptionally high. Goldman Sachs analysts noted that market expectations had already outpaced reality, and guidance that merely met forecasts was seen as "not surprising enough" to sustain the rally.