Sandisk joins Western Digital, Seagate in signaling strong AI storage demand
FILE PHOTO: The Sandisk Corporation logo is seen as part of a display at the Microsoft Ignite technology conference in Chicago, Illinois, May 4, 2015. REUTERS/Jim Young/File Photo
April 30 : Sandisk forecast quarterly revenue above estimates on Thursday, joining peers Western Digital and Seagate in signaling that enterprise spending on data storage products used in artificial intelligence data centers remains strong.
Sandisk shares, which have risen about 350 per cent this year, fell over 6 per cent in extended trading, following a sharp AI-driven rally in storage stocks earlier this week sparked by Seagate’s strong forecast. Western Digital, whose shares have more than doubled this year, also slipped nearly 8 per cent even as it forecast quarterly revenue above estimates.
Western Digital and Sandisk's outlooks are "failing to provide the necessary 'wow factor' needed to sustain the breakneck momentum," Michael Ashley Schulman, Partner at Cerity Partners said, addressing the sell-off of the stocks.
The explosive growth in generative AI, which requires massive computational power and storage, has boosted demand for the company's high-performance enterprise solid-state drives in data centers.
AI systems require more data storage, driving demand for flash-memory chips faster than supply can keep up. This shortage allows Sandisk to charge higher prices.
The company expects revenue of between $7.75 billion and $8.25 billion for the fourth quarter, compared with analysts' average estimate of $6.49 billion, according to data compiled by LSEG.
It also expects adjusted profit between $30 and $33 per share, above estimates of $22.70.
“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,” CEO David Goeckeler said.
Revenue in the company's Datacenter segment, which includes high-capacity flash memory storage solutions, more than tripled in the third quarter to $1.47 billion.
It reported a 97 per cent rise in third-quarter revenue to $5.95 billion, beating estimates of $4.70 billion. Adjusted profit came in at $23.41 per share, compared with estimates of $14.54 per share.
