Goldman Sachs: SanDisk and Western Digital beat earnings expectations but still fell in after-hours trading, as overblown market expectations triggered profit-taking.

Goldman Sachs’ TMT team said both SanDisk and Western Digital fell in after-hours trading, despite posting strong quarterly results. The market focus was not on the quarterly figures themselves, but on the fact that buyer expectations were already elevated ahead of the earnings release. SanDisk beat consensus estimates on revenue, gross margin and earnings per share (EPS), but its third-quarter revenue guidance was slightly below market expectations, while its EPS guidance was roughly in line. Against the backdrop of a notable prior run-up in share prices, the earnings results triggered some profit-taking. More positive factors: SanDisk has secured multi-year customer supply agreements covering over 50% of its planned bit production for fiscal 2027 and 65% for fiscal 2028, with price floors to support NAND pricing visibility and share repurchases. Western Digital also exceeded expectations on revenue, margin and EPS, and its third-quarter revenue and margin guidance was above market estimates, yet its share price still declined. Goldman Sachs noted that given already high expectations for HDD prices and margins, the company’s guidance failed to meaningfully lift market expectations further. The market also expressed concerns that storage capacity shipment growth could slow as the company advances expansion of its 40TB ePMR products and HAMR certification. Goldman Sachs summed up the after-hours performance as "beating earnings estimates, but still falling short of elevated expectations". The fundamentals of NAND and HDD remain supportive, but market expectations are already at a high level.