Key Takeaways
- SanDisk delivered Q3 revenue of $5.95 billion, nearly doubling year-over-year, yet shares dropped over 6% after market close
- The company’s Datacenter division saw revenue surge more than threefold to $1.47 billion during the quarter
- Over the trailing twelve months, Seagate and Western Digital shares have rocketed approximately 600% and 850% respectively
- Bank of America characterizes the hard disk drive industry as an “oligopoly,” providing Seagate and Western Digital significant pricing leverage
- Artificial intelligence workloads are generating storage demand that exceeds available supply, enabling manufacturers to implement price increases
SanDisk delivered impressive third-quarter results, yet investors responded with disappointment. The company recorded $5.95 billion in revenue, representing a 97% increase from the prior year and significantly exceeding Wall Street’s $4.70 billion projection. On an adjusted basis, earnings reached $23.41 per share, obliterating the analyst consensus of $14.54.
Despite having already climbed approximately 350% throughout the current year, the stock tumbled more than 6% during Thursday’s extended trading session.
Management’s fourth-quarter revenue outlook of $7.75 billion to $8.25 billion substantially exceeded the $6.49 billion analyst forecast. The company’s adjusted earnings guidance of $30 to $33 per share similarly surpassed Street expectations of $22.70 by a considerable margin.
What explains the share price decline? According to Michael Ashley Schulman, analyst at Cerity Partners, the guidance lacked the “wow factor” necessary to sustain the stock’s upward trajectory. Western Digital experienced a similar fate, falling nearly 8% in the same trading session despite also exceeding estimates and providing above-consensus guidance.
Chief Executive David Goeckeler characterized the period as transformative. “This quarter marks a fundamental inflection point for SanDisk — where our technology leadership is enabling a deliberate shift in our mix toward the highest-value end markets, led by Datacenter,” he stated.
The Datacenter division emerged as the clear highlight, with quarterly revenue exceeding $1.47 billion after more than tripling from the previous year. Artificial intelligence applications require massive flash storage infrastructure, and current demand significantly outstrips available supply — creating opportunities for SanDisk to implement premium pricing strategies.
Artificial Intelligence Drives Storage Industry Expansion
The storage sector has emerged as one of the most obvious winners from the artificial intelligence infrastructure buildout. Data centers require high-capacity storage solutions to archive, train, and manage massive AI datasets. While graphics processing units provide computational power, hard disk drives and flash memory systems manage the data infrastructure — and demand shows no signs of abating.
Seagate announced fiscal 2025 annual revenue totaling $9.10 billion, representing a 39% year-over-year increase. The company’s latest quarterly results showed $3.11 billion in revenue, up 44% and surpassing the $2.95 billion Street estimate. Adjusted earnings per share of $4.10 exceeded the $3.50 consensus forecast.
Western Digital recorded fiscal 2025 revenue of $9.52 billion, climbing 51% from the previous year. Second-quarter revenue reached $3.02 billion, topping Wall Street’s $2.98 billion projection. Adjusted earnings per share of $2.13 beat expectations of $1.95.
Bank of America analyst Wamsi Mohan characterized the hard disk drive sector as an “oligopoly,” with only a limited number of competitors and minimal risk of new market entrants. This competitive landscape provides Seagate and Western Digital with pricing authority as technology companies compete for storage infrastructure.
Strategic Contracts and Advanced Manufacturing Technologies
Mohan also highlighted long-term supply contracts as representing a transition toward more stable, predictable revenue streams. Both Seagate and Western Digital are increasingly securing multi-year customer commitments rather than depending exclusively on transactional hardware purchases.
Heat-assisted magnetic recording (HAMR) technology represents another favorable industry development. This innovation enables manufacturers to increase data density on existing drive platforms, reducing component expenses while expanding storage capacity.
Mohan’s optimistic scenario projects Seagate earnings approaching $45 per share by 2028, supporting a $700 price target. For Western Digital, his analysis suggests potential earnings of $33 per share with a corresponding $495 price objective.
SanDisk shares had appreciated approximately 350% during 2025 prior to Thursday’s after-hours decline.
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