Key Highlights
- Sandisk delivered Q3 revenue of $5.95 billion, representing a 97% year-over-year increase, though shares declined over 6% in extended trading
- The company’s Datacenter division generated $1.47 billion in Q3 revenue, reflecting more than triple growth
- Seagate and Western Digital shares have climbed approximately 600% and 850% respectively during the past year
- Bank of America characterizes the HDD sector as an “oligopoly,” providing Seagate and Western Digital with substantial pricing leverage
- Data storage demand driven by AI applications continues exceeding available supply, enabling upward price adjustments
Sandisk delivered robust third-quarter results, though investors responded with muted enthusiasm. The company reported revenue of $5.95 billion, marking a 97% year-over-year expansion and significantly exceeding Wall Street’s $4.70 billion projection. Adjusted earnings reached $23.41 per share, substantially surpassing the analyst estimate of $14.54.
Shares, which had already climbed approximately 350% during 2025, declined more than 6% during Thursday’s after-hours session.
The company’s Q4 revenue projection of $7.75 billion to $8.25 billion considerably exceeded the analyst consensus of $6.49 billion. Adjusted profit guidance ranging from $30 to $33 per share similarly outpaced the $22.70 Wall Street estimate by a substantial margin.
What explains the stock decline? Cerity Partners analyst Michael Ashley Schulman offered a straightforward assessment — the forward guidance lacked the exceptional strength required to sustain the existing momentum. Western Digital, which similarly exceeded estimates and provided above-consensus guidance, experienced a nearly 8% decline during the identical trading session.
CEO David Goeckeler characterized the quarter as transformational. “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 performance leader, with revenue surging more than threefold during Q3 to reach $1.47 billion. AI workloads demand massive quantities of flash storage, and current demand levels exceed available supply — creating favorable pricing dynamics for Sandisk.
AI Infrastructure Drives Storage Sector Expansion
The storage industry has emerged as among the most direct beneficiaries of AI infrastructure development. Data centers require high-capacity drives to store, train, and manage extensive AI datasets. While GPUs provide computational power, hard disk drives and flash storage manage the data — and this demand continues accelerating.
Seagate announced fiscal 2025 annual revenue of $9.10 billion, representing a 39% year-over-year gain. The company’s most recent quarter delivered $3.11 billion, up 44% and surpassing the $2.95 billion estimate. Adjusted EPS of $4.10 exceeded the $3.50 consensus.
Western Digital reported fiscal 2025 revenue of $9.52 billion, reflecting a 51% year-over-year increase. The firm’s second quarter revenue of $3.02 billion beat the $2.98 billion Wall Street projection. Adjusted EPS of $2.13 outperformed the $1.95 expectation.
Bank of America analyst Wamsi Mohan characterized the HDD sector as an “oligopoly,” with limited competitors and minimal threat from new market entrants. This market structure provides Seagate and Western Digital with pricing authority as technology companies compete for storage capacity.
Supply Agreements and Advanced Technology Drive Growth
Mohan highlighted long-term supply agreements as representing a transition toward more stable, recurring revenue streams. Both Seagate and Western Digital are progressively securing customers through contracts rather than depending on spot hardware transactions.
Heat-assisted magnetic recording (HAMR) technology represents another favorable development. This advancement enables companies to store greater data volumes on existing drives, reducing material expenses while expanding capacity.
Mohan’s optimistic scenario projects Seagate earnings approaching $45 per share by 2028, with a price target of $700. For Western Digital, his analysis anticipates potential earnings of $33 per share and a price target of $495.
Sandisk’s stock had appreciated roughly 350% during 2025 prior to Thursday’s after-hours decline.
