Profits Don't Matter? SanDisk, Western Digital Post Strong Earnings but Shares Plunge Pre-Market

Storage industry leaders SanDisk (SNDK-US) and Western Digital (WDC-US) both plunged sharply in pre-market trading on Thursday (June 6), despite reporting financial results and quarterly revenue forecasts that exceeded analyst expectations. The sell-off reflects investor unease that even strong performance fails to meet the market’s elevated demands for accelerated growth from AI-beneficiary stocks.

SanDisk dropped as much as 9.5%, trading at $1,222.04; Western Digital tumbled 15.46% to $438.92. Both companies released their earnings after Wednesday's U.S. market close, providing quarterly revenue outlooks above the consensus compiled by LSEG, yet still below higher benchmarks set by some investors.

This selloff highlights a broader trend: as AI-related stocks have surged this year, even robust earnings and optimistic guidance may be punished if growth appears to decelerate. SanDisk’s stock has already risen over fivefold this year, while Western Digital has more than tripled, driven by market bets that data storage and memory chipmakers would be primary beneficiaries of expanding AI spending by major tech firms.

In comparison, the Philadelphia Semiconductor Index is up nearly 70% this year, while the S&P 500 has gained 12.8%. Both companies have significantly outperformed. A shortage of high-end memory chips has driven prices sharply higher, boosting revenues and profits across the sector. However, even with sustained demand for AI data center components, any hint that growth might normalize triggers swift profit-taking.

RBC Capital Markets noted that SanDisk’s long-term agreements with customers enhance operational visibility, but market skepticism may persist. The firm indicated that SanDisk’s margins may have peaked and that price increases are beginning to slow.

For the current quarter, SanDisk forecasts revenue between $10.3 billion and $10.8 billion; Western Digital expects approximately $4.1 billion, plus or minus $100 million. While both figures surpass general market expectations, investors appear to believe these projections are insufficient to justify prior valuations.

Related chip stocks also came under pressure: Seagate Technology (STX-US) fell 3.6% pre-market; Micron (MU-US) declined 3.7%, having recently joined the trillion-dollar semiconductor club after its market cap surpassed $1 trillion in late May. SK Hynix’s U.S.-listed shares (SKHY-US) plunged 6.2%; Intel (INTC-US) dropped 1.2%; AMD (AMD-US) and Marvell Technology (MRVL-US) fell 1.0% and 1.1%, respectively.

Nonetheless, analysts remain bullish on data center demand supporting storage vendors. SanDisk’s data center revenue is projected to grow over 400% in 2026 compared to 2025, doubling from Q3 to Q4 alone—indicating continued strength in AI infrastructure demand. The real concern isn’t vanishing demand, but whether pricing power, margins, and revenue growth can continue exceeding already sky-high expectations following explosive expansion.