AI's flash drive fatales: Sandisk and WD get the cold shoulder from Wall Street 📉

SanDisk and Western Digital fell roughly 10% in pre-market trading on Aug. 6 after their forward outlooks failed to match elevated expectations, raising questions about whether capital is beginning to rotate away from artificial intelligence beneficiaries. Both companies had been among the largest gainers of the AI storage boom, with SanDisk up more than 3,000% and Western Digital up more than 550% over the past 12 months.

SanDisk posted record fourth-quarter revenue of $8.97 billion and non-GAAP EPS of $39.25, beating analyst estimates. Western Digital also delivered a double beat, reporting revenue of $3.75 billion, up 44% year over year, while gross margin expanded to 54.4%. Despite the results, both stocks remain roughly 50% below their all-time highs, and the selloff was driven primarily by guidance rather than the reported quarter.

SanDisk's first-quarter outlook came in below expectations, with projected revenue of $10.7 billion versus the $11.2 billion analysts had estimated, and its EPS guidance also fell short. Western Digital's first-quarter outlook was described as solid, but after a 550% run, investors were looking for another blowout beat. SanDisk's board of directors approved an additional $14 billion share buyback program, bringing the total authorization to $15.5 billion.

The reaction has been interpreted by some market participants as part of a broader rotation. Gold has risen more than 7% over the past few days, while bitcoin is holding above $64,000 and has shrugged off the recent Coldcard exploit with little price reaction. Crypto traders cited these moves as a potential sign of shifting momentum, following a period in which capital had flowed heavily into AI names.

SanDisk trades under the ticker SNDK and Western Digital under WDC. Bitcoin trades under the ticker $BTC.