Key Highlights
- SanDisk delivered Q3 revenue of $5.95 billion, representing a 97% year-over-year increase, yet shares dropped over 6% after hours
- The company’s Datacenter division generated $1.47 billion in Q3, more than tripling from the prior year
- Over the last twelve months, Seagate and Western Digital shares have skyrocketed approximately 600% and 850% respectively
- Bank of America characterizes the hard disk drive sector as an “oligopoly,” providing Seagate and Western Digital with substantial pricing leverage
- Data storage demand driven by AI continues to exceed available supply, enabling price increases across the industry
SanDisk delivered impressive third-quarter results, yet investors responded with skepticism. The company reported $5.95 billion in revenue, reflecting a remarkable 97% jump from the same period last year and significantly exceeding the analyst projection of $4.70 billion. Adjusted earnings reached $23.41 per share, handily surpassing expectations of $14.54.
Despite a year-to-date gain of approximately 350%, shares tumbled more than 6% during Thursday’s extended trading session.
Management’s fourth-quarter revenue guidance ranged from $7.75 billion to $8.25 billion, substantially higher than the $6.49 billion consensus estimate. The company also projected adjusted earnings between $30 and $33 per share, well above analyst expectations of $22.70.
What explains the negative market reaction? According to Michael Ashley Schulman, an analyst at Cerity Partners, the forward guidance lacked the “wow factor” necessary to sustain the stock’s upward trajectory. Western Digital experienced a similar fate, declining nearly 8% after hours despite also exceeding expectations and issuing above-consensus guidance.
CEO David Goeckeler characterized the results 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 winner, with quarterly revenue exceeding $1.47 billion—more than three times the prior-year figure. Artificial intelligence applications require massive amounts of flash memory, and current demand significantly outstrips available supply—allowing SanDisk to implement premium pricing strategies.
AI Sparks Storage Industry Expansion
The data storage sector has emerged as one of the most direct beneficiaries of AI infrastructure investments. Data centers require massive-capacity drives to archive, train, and process extensive AI datasets. While graphics processing units manage computational tasks, hard drives and solid-state storage handle data persistence—and this requirement shows no signs of moderating.
Seagate announced fiscal 2025 total revenue of $9.10 billion, marking a 39% year-over-year increase. The company’s latest quarterly performance reached $3.11 billion, up 44% and surpassing the $2.95 billion analyst estimate. Adjusted earnings per share of $4.10 exceeded the $3.50 consensus.
Western Digital reported fiscal 2025 revenue totaling $9.52 billion, representing 51% annual growth. Second-quarter revenue of $3.02 billion beat Wall Street’s $2.98 billion projection. Adjusted earnings per share of $2.13 outperformed the $1.95 forecast.
Bank of America analyst Wamsi Mohan characterized the hard drive industry as an “oligopoly,” with limited competition and minimal risk of market disruption from new players. This market structure provides Seagate and Western Digital considerable pricing authority as technology companies compete for storage infrastructure.
Multi-Year Agreements and Technological Innovation
Mohan highlighted the industry’s shift toward long-term supply contracts as evidence of evolving revenue models. Both Seagate and Western Digital are progressively securing multi-year customer commitments instead of depending solely on transactional hardware sales.
Heat-assisted magnetic recording (HAMR) represents another growth catalyst. This technology enables manufacturers to increase data density on existing drive platforms, reducing component expenses while expanding storage capacity.
In Mohan’s bullish scenario, Seagate’s earnings could approach $45 per share by 2028, supporting a $700 price target. For Western Digital, his analysis projects potential earnings of $33 per share with a corresponding $495 price objective.
Prior to Thursday’s after-hours decline, SanDisk shares had appreciated roughly 350% during 2025.
