What's happening
SanDisk and Western Digital reported fiscal third-quarter results on April 30, 2026, highlighting surging demand for AI data storage solutions. SanDisk delivered revenue of $5.95 billion, up 97% sequentially and 251% year-over-year, significantly beating analyst estimates of $4.70 billion. The company's Datacenter segment generated $1.467 billion in revenue, up 233% sequentially and 645% year-over-year, while non-GAAP diluted earnings per share reached $23.41, well above the $14.54 estimate.
Western Digital reported Q3 fiscal 2026 revenue of $3.337 billion, up 11% quarter-over-quarter and 45% year-over-year, with non-GAAP diluted EPS of $2.72, up 97% from the prior year. The company's non-GAAP gross margin expanded to 50.5%, up 1040 basis points year-over-year. SanDisk CEO David Goeckeler described the quarter as "a fundamental inflection point" driven by technology leadership in high-value datacenter markets, while Western Digital CEO Irving Tan highlighted strong execution across all end markets.
Why it matters for markets
The results demonstrate how AI infrastructure demand is expanding beyond semiconductor chips to encompass the broader data storage ecosystem. SanDisk's datacenter revenue surge of 645% year-over-year to $1.467 billion illustrates the scale of investment flowing into AI-capable storage infrastructure. Western Digital's gross margin expansion of 1040 basis points to 50.5% shows how companies are capturing premium pricing for AI-optimized storage solutions.
Despite the strong fundamentals, both stocks declined in extended trading, with SanDisk falling over 6% and Western Digital dropping nearly 8%. The market reaction reflects elevated expectations following year-to-date gains of approximately 350% for SanDisk shares and more than 100% for Western Digital. Western Digital's current market capitalization of $148.56 billion and trading price of $434.52 represent significant appreciation from its 52-week low of $43.60.
Forward guidance suggests continued momentum, with SanDisk projecting Q4 2026 revenue of $7.75-$8.25 billion and non-GAAP EPS of $30.00-$33.00, while Western Digital forecasts Q4 revenue of $3.65 billion plus or minus $100 million. However, as Cerity Partners' Michael Ashley Schulman noted, the outlooks are "failing to provide the necessary 'wow factor' needed to sustain the breakneck momentum" that has driven the stocks' substantial year-to-date gains.
Sectors and assets to watch
The data storage sector is experiencing a fundamental shift as AI workloads drive demand for high-performance storage solutions. Western Digital Corporation (WDC), with its $148.56 billion market capitalization and portfolio spanning hard disk drives, solid-state drives, and flash memory products under WD and SanDisk brands, represents the primary beneficiary of this trend. The company's 41.1 price-to-earnings ratio reflects investor expectations for continued AI-driven growth.
Broader semiconductor and technology infrastructure companies serving AI data centers should benefit from similar tailwinds. The storage sector's performance validates the expanding capital expenditure requirements for AI infrastructure beyond traditional chip manufacturers, suggesting sustained demand for enterprise storage solutions, cloud infrastructure components, and hyperscale data center equipment.
What to watch next
Monitor quarterly datacenter revenue growth rates for both companies, particularly SanDisk's datacenter segment performance relative to its $1.467 billion Q3 baseline. Track whether Western Digital can maintain its 50.5% gross margin levels and continue expanding profitability as AI storage demand evolves. Watch for guidance updates in upcoming quarters to assess whether the companies can deliver the accelerating growth rates needed to justify their elevated valuations following year-to-date gains exceeding 100%.