Sandisk, Western Digital drag on chip stocks as lofty exp…

Data storage companies Sandisk and Western Digital experienced declines in their stock prices after reporting quarterly results that, while beating estimates, did not meet high investor expectations. Sandisk's shares dropped 9.2% and Western Digital's fell by 14.6%. Both companies had seen significant increases in their stock prices throughout the year due to optimism surrounding AI and increased data center demand. Despite robust demand, investor skepticism persists about sustaining growth, particularly as margins may have peaked and price growth is moderating. Analysts predict continued demand from data centers will support these firms in the long term.

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Aug 6 (Reuters) - Data storage companies tumbled in premarket trading on Thursday after quarterly results from Sandisk and Western Digital failed to sustain momentum in an industry that has become one of Wall Street's hottest bets this year.

Shares of Sandisk (SNDK.O), opens new tab lost 9.2% to ‌trade at $1,226.04, while Western Digital (WDC.O), opens new tab shed 14.6% and was last changing hands at $443.3.

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After the closing bell on Wednesday, both Sandisk and Western Digital forecast quarterly revenue that beat estimates compiled by LSEG, but fell short of high market expectations.

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The reaction underscores the high bar set for the market's AI favorites after stellar gains this year, with even strong earnings and upbeat forecasts ⁠failing to satisfy investors.

Sandisk has soared more than fivefold this year and Western Digital has more than tripled on bets that data storage and memory chipmakers could be among the biggest beneficiaries of Big Tech's AI spending spree.

Both Sandisk and Western Digital have far outpaced a near-70% rise in the Philadelphia SE Semiconductor Index (.SOX), opens new tab and a 12.8% gain in the benchmark S&P 500 (.SPX), opens new tab.

A global shortage of high-end memory chips has fueled a sharp rise in chip prices, filling the coffers of industry players.

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But even as demand for AI data-center components shows few signs of easing, ‌investors ⁠are punishing companies at the slightest hint that the growth may normalize.

DEMAND ROBUST, BUT SKEPTICISM COULD LINGER

Brokerage RBC Capital Markets said while Sandisk's long-term customer agreements were helping extend visibility into its business, it expects "investor skepticism to continue."

Margins could be near peaks and price growth was moderating, the brokerage said.

Sandisk forecast ⁠first-quarter revenue between $10.3 billion and $10.8 billion, while Western Digital expects $4.1 billion, plus or minus $100 million, in Q1 revenue.

Peer Seagate Technology (STX.O), opens new tab fell 3.6%. Memory chipmaker Micron Technology <MU.O>, which vaulted into the industry's upper echelons after topping $1 trillion ⁠in market value in late May, was down 3.7%.

U.S.-listed shares of SK Hynix slid 6.2%. Intel (INTC.O), opens new tab fell 1.2%, AMD (AMD.O), opens new tab was off 1% and Marvell Technology (MRVL.O), opens new tab lost 1.1%.

Still, analysts see data ⁠center demand continuing to lift these firms. At Sandisk, revenue from data centers rose more than 400% in 2026 over 2025. It doubled in the fourth quarter, compared to the third quarter.

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Reporting by Purvi Agarwal and Niket Nishant in Bengaluru; Editing by Pooja Desai

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Sandisk, Western Digital drag on chip stocks as lofty expectations eclipse strong earnings

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