WDC · investment memo
Company's own same-basis (post-separation) quarters; FY2026E full-year non-GAAP 36.3%, set 1.8pp below with three named causal reasons. Bridge: 34.5% = 45.0% gross - 6.5% R&D - 3.5% SG&A - 0.5% other. Constraint m_EBIT,T 34.5 <= m_gross,T 45.0 SATISFIED. Added as percent; pre-existing `terminal_margin` is the fraction 0.345.
Four distinct questions, one field each. A price is not a thesis: the trigger below forces a re-underwrite and freezes further purchases — it is never an automatic sell.
A daily close below $339.82 triggers a mandatory re-underwrite and freezes further purchases. It is not an automatic sell unless a separate fundamental invalidation condition has been breached.
Fundamental and falsifiable, never price-based. If one is satisfied the thesis is marked dead and the position is retained only by explicit decision.
Named cause: HAMR qualification slips at WDC while Seagate's 40TB+ HAMR ramps, and CY2028–29 LTA renewals price at flat $/TB. Mechanics: WDC's 44TB HAMR is in qualification today. If it lands 2–4 quarters late while Seagate is at 70% HAMR nearline exabytes (its stated FY2027 target), WDC's cost per TB on 40TB-class drives sits above Seagate's; it must either concede share or absorb the gap. Simultaneously the LTAs that "extend into calendar 2029" reprice, and with hyperscalers facing 50% supplier gross margins the renewal is flat at best. Quantified: FY2029 revenue $19.5bn (exabyte growth ~20%