Sandisk (SNDK), Seagate (STX) and Western Digital (WDC) Back Strong AI Storage Demand

TLDR

• Sandisk beat Q3 estimates with revenue of $5.95 billion, up 97% year-over-year, but stock fell over 6% in after-hours trading
• Sandisk’s Datacenter segment revenue more than tripled to $1.47 billion in Q3
• Seagate and Western Digital stocks have surged ~600% and ~850% respectively over the past 12 months
• Bank of America sees the HDD market as an “oligopoly,” giving Seagate and Western Digital strong pricing power
• AI-driven demand for data storage continues to outpace supply, allowing companies to raise prices

Sandisk posted a strong third quarter, but Wall Street wasn’t impressed enough to hold the stock up. Revenue came in at $5.95 billion, up 97% year-over-year and well ahead of analyst estimates of $4.70 billion. Adjusted earnings hit $23.41 per share, crushing the $14.54 estimate.

Sandisk Corporation, SNDK

The stock, which had already surged around 350% this year, still dropped more than 6% in after-hours trading on Thursday.

The Q4 revenue forecast of $7.75 billion to $8.25 billion was far above the $6.49 billion analyst consensus. Adjusted profit guidance of $30 to $33 per share also topped the $22.70 estimate by a wide margin.

So why did the stock fall? Analyst Michael Ashley Schulman of Cerity Partners put it plainly — the outlook failed to provide the “wow factor” needed to keep the momentum going. Western Digital, which also beat estimates and guided above consensus, slipped nearly 8% in the same session.

The Datacenter segment was the standout, with revenue more than tripling in Q3 to $1.47 billion. AI workloads require enormous amounts of flash storage, and demand is running ahead of supply — giving Sandisk room to charge higher prices.

AI Fueling a Storage Arms Race

The broader storage sector has been one of the clearest beneficiaries of the AI buildout. Data centers need high-capacity drives to store, train, and manage large AI datasets. While GPUs handle the compute, hard disk drives and flash storage handle the data — and that demand isn’t slowing.

Seagate reported fiscal 2025 annual revenue of $9.10 billion, up 39% year-over-year. Its most recent quarter came in at $3.11 billion, up 44% and ahead of the $2.95 billion estimate. Adjusted EPS of $4.10 beat the $3.50 consensus.

Western Digital posted fiscal 2025 revenue of $9.52 billion, up 51% year-over-year. Its second quarter revenue of $3.02 billion beat the $2.98 billion Wall Street estimate. Adjusted EPS of $2.13 topped the $1.95 expectation.

Bank of America analyst Wamsi Mohan described the HDD market as an “oligopoly,” with only a handful of players and little threat of new entrants. That structure gives Seagate and Western Digital pricing power as tech giants scramble for storage capacity.

Long-Term Contracts and New Technology

Mohan also pointed to long-term supply agreements as a shift toward more predictable, recurring revenue. Both Seagate and Western Digital are increasingly locking in customers rather than relying on spot hardware sales.

Heat-assisted magnetic recording (HAMR) technology is another tailwind. It allows companies to pack more data onto existing drives, cutting material costs while boosting capacity.

Mohan’s bull case has Seagate earnings nearly doubling to $45 per share by 2028, with a price target of $700. For Western Digital, he sees potential earnings of $33 per share and a price target of $495.

Sandisk’s stock had risen roughly 350% in 2025 before Thursday’s after-hours drop.

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