Strong earnings from Sandisk and Western Digital were not enough to satisfy investors, prompting fresh debate over whether money is beginning to move away from AI-focused stocks and back into other areas, including cryptocurrency.
Shares of Sandisk (SNDK) and Western Digital (WDC), two of the biggest beneficiaries of the AI-driven storage boom, fell about 10% in pre-market trading on Thursday despite both companies reporting better-than-expected quarterly results.
Sandisk posted record fourth-quarter revenue of $8.97 billion and adjusted earnings per share of $39.25, comfortably surpassing forecasts. Western Digital also exceeded expectations, reporting $3.75 billion in revenue, a 44% increase from the previous year, while its gross margin expanded to 54.4%. Despite the strong financial performance, both stocks are now trading roughly 50% below their historical peaks.
The market reaction was largely driven by weaker-than-expected outlooks. Sandisk’s first-quarter forecast disappointed investors, with expected revenue of $10.7 billion falling short of Wall Street’s $11.2 billion estimate. Its earnings guidance also missed projections. Western Digital’s outlook was more positive, but after a massive 500% rally, investors were demanding another major upside surprise.
Over the last 12 months, Sandisk and Western Digital have climbed more than 3,000% and 550%, respectively, fueled by the surge in AI investment and demand for storage infrastructure. Meanwhile, assets such as bitcoin and precious metals have lagged behind the AI-driven market rally.
Sandisk also announced an expanded stock repurchase initiative, with its board approving an additional $14 billion buyback program that lifts its total authorization to $15.5 billion.
However, as enthusiasm around AI-related stocks begins to cool, investors are watching for signs of a broader rotation in capital flows. Gold has gained more than 7% in recent days, while bitcoin has remained above $64,000 and showed limited reaction to the Coldcard security incident.
Crypto market participants may interpret these developments as a potential shift in investor preference, especially after months of speculation that capital has been flowing heavily into AI companies while leaving bitcoin and other digital assets behind. A slowdown in the AI trade could potentially reopen the door for renewed interest in crypto markets.
