Sandisk, Western Digital drag on chip stocks as lofty expectations eclipse strong earnings
FILE PHOTO: Semiconductor chips are seen on a printed circuit board in this illustration picture taken February 17, 2023. REUTERS/Florence Lo/Illustration/File Photo
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Aug 6 : 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 lost 9.2 per cent to trade at $1,226.04, while Western Digital shed 14.6 per cent and was last changing hands at $443.3.
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.
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.
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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 per cent rise in the Philadelphia SE Semiconductor Index and a 12.8 per cent gain in the benchmark S&P 500.
A global shortage of high-end memory chips has fueled a sharp rise in chip prices, filling the coffers of industry players.
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 fell 3.6 per cent. Memory chipmaker Micron Technology , which vaulted into the industry’s upper echelons after topping $1 trillion in market value in late May, was down 3.7 per cent.
U.S.-listed shares of SK Hynix slid 6.2 per cent. Intel fell 1.2 per cent, AMD was off 1 per cent and Marvell Technology lost 1.1 per cent.
Still, analysts see data center demand continuing to lift these firms. At Sandisk, revenue from data centers rose more than 400 per cent in 2026 over 2025. It doubled in the fourth quarter, compared to the third quarter.
Source: Reuters
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