Western Digital shares tumbled 13.44% in pre-market trading on Thursday, as the data-storage giant's fiscal fourth-quarter results and forward guidance, despite surpassing Wall Street estimates, failed to satisfy 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, both comfortably above analyst consensus estimates. Net income surged more than twelvefold year-over-year. 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. The guidance was also seen as less impressive than the 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.

The selloff was compounded by a broader rotation out of high-flying AI storage names, as traders locked in profits following a massive run-up. Goldman Sachs analysts noted that market expectations had already outpaced reality, and guidance that merely met forecasts was deemed "not surprising enough" to sustain the rally, triggering aggressive profit-taking across the post-market and pre-market sessions.