Key Takeaways
- Storage and memory stocks rebounded Wednesday following Seagate’s earnings beat and upbeat forward guidance
- SanDisk climbed 7.8%, Western Digital surged 10.5%, and Micron advanced 4.7% during premarket hours
- A Wall Street Journal article about OpenAI falling short of growth expectations sparked Tuesday’s downturn
- Seagate’s 17.8% premarket surge reinforced confidence that AI storage demand continues at robust levels
- SanDisk’s fiscal Q3 financial results are scheduled for April 30, with analysts projecting continued strength
SanDisk shares staged a significant recovery Wednesday morning after being swept up in Tuesday’s AI-sector retreat. The rebound was fueled by Seagate’s impressive quarterly performance, which eased concerns about data storage market fundamentals.
SanDisk shares advanced 7.8% to $1,080 during premarket activity. Western Digital posted a 10.5% gain to $432, while Micron Technology increased 4.7% to $528.12.
The previous day’s decline followed a Wall Street Journal article indicating that OpenAI had fallen short of critical growth benchmarks. This news rattled investors throughout the artificial intelligence ecosystem, dragging down memory and storage stocks across the board.
Seagate quickly reversed the sentiment. The storage device manufacturer exceeded expectations on both profit and revenue metrics, while providing fiscal fourth-quarter guidance that topped analyst estimates. Seagate shares jumped 17.8% to $682 in premarket action after declining 2.8% during Tuesday’s session.
For those holding positions in SanDisk and comparable companies, Seagate’s performance delivered an important message: regardless of OpenAI’s specific challenges, overall demand for AI infrastructure storage remains robust.
Memory sector stocks have delivered exceptional returns throughout the current year. SanDisk had accumulated gains of 322% heading into Tuesday’s market close. Seagate posted increases of 110%, Western Digital gained 127%, and Micron climbed 77%.
Wall Street analysts remain optimistic about future prospects. Melius Research analyst Ben Reitzes launched coverage of both Micron and SanDisk with Buy ratings Monday. He advised clients that the upward trend maintains momentum, characterizing memory as “existential” to artificial intelligence advancement and projecting “exponential” demand growth.
D.A. Davidson also started coverage of Micron with a Buy recommendation Wednesday, establishing a $1,000 price objective.
SanDisk Reports Results Thursday
Investor attention now shifts to SanDisk’s fiscal third-quarter earnings, scheduled for April 30. The company established elevated expectations with its previous quarterly disclosure.
During fiscal Q2, SanDisk delivered revenue of $3.03 billion, representing a 31% sequential increase and 61% year-over-year growth. GAAP net income reached $803 million, translating to $5.15 per diluted share.
The Q3 outlook particularly captured market attention. SanDisk projected revenue between $4.4 billion and $4.8 billion, with non-GAAP diluted EPS ranging from $12 to $14. The company also guided for gross margins of 65% to 67%, substantially exceeding the 51.1% achieved in Q2.
Datacenter Segment Shows Accelerating Growth
SanDisk’s datacenter operations are increasingly becoming a focal point for investors. Datacenter revenue expanded 64% sequentially during Q2, climbing to $440 million from $269 million in the preceding quarter.
The company attributed growth to AI infrastructure developers, semi-custom clients, and major technology firms implementing AI capabilities.
Investors monitoring Thursday’s earnings presentation will concentrate on NAND flash pricing dynamics, whether datacenter growth sustained its pace through Q3, and management commentary regarding full-year prospects.
The company’s earnings conference call is scheduled for 1:30 p.m. Pacific Time on April 30.
