SanDisk and Western Digital Are Up 400%+ in a Year: Should Investors Still Pay Attention?

Two familiar names in data storage—SanDisk (NASDAQ: SNDK) and Western Digital (NASDAQ: WDC)—have delivered eye-popping gains over the last year. In the market’s current “AI everything” era, these companies have become surprising stars because one thing is suddenly scarce again: storage.

This rewritten report is based on the themes and details discussed in the original coverage by24/7 Wall St..It explains why storage stocks can soar during AI buildouts, why valuations can look “too expensive” at first glance, and what could break the story if the cycle turns.

Why Data Storage Is Suddenly One of the Hottest “AI” Trades

When most people think of artificial intelligence, they picture graphics chips, cloud platforms, or famous chatbot brands. But AI has a less glamorous requirement that can’t be skipped: data has to be stored somewhere, moved quickly, and accessed constantly.

Modern AI systems don’t just learn from text anymore. Increasingly, they train on images and video—including high-resolution content like 4K video. That shift makes storage needs explode. As training datasets grow, the “boring” part of AI—warehousing data reliably and cheaply—becomes a huge business.

Hyperscalers’ spending is a major fuel source

The largest cloud companies (often called hyperscalers) have been pouring money into AI infrastructure. The original report highlighted expectations that hyperscalers could invest around $400 billion in a single year on AI-related hardware. That kind of spending doesn’t only boost chips; it boosts the entire supply chain, including storage devices used inside data centers.

Here’s the key idea: if AI investment stays elevated for multiple years, storage demand can look less like a short-term cycle and more like a structural trend.

Western Digital: “Expensive” on Paper, But Not Necessarily in Context

Western Digital is a longtime storage heavyweight. It serves consumer and enterprise markets, with major exposure to data centers. One reason the stock has climbed so sharply is that investors believe Western Digital is positioned to benefit from a storage crunch—especially in environments where AI workloads keep expanding.

Why valuation looks high at first glance

In the original discussion, Western Digital’s current valuation was compared to its long-run history. On a simple trailing basis, it can appear that investors are paying a premium relative to the company’s older “normal” multiples. That can make cautious investors wonder if the stock has become overheated.

However, supporters of the stock argue that the context has changed. If the market believes the current storage demand wave is not just a temporary rebound—but part of a multi-year AI infrastructure buildout—then investors may accept higher valuation multiples than they did during slower eras.

Recent performance and estimate beats matter

Another reason confidence rose is that Western Digital has been outperforming expectations. The report cited that the company beat earnings-per-share estimates (excluding certain items) by about 13% in a recent quarter, while also topping revenue estimates by roughly 3.4%. Earnings “beats” often act like gasoline on a rally because they suggest analysts may still be underestimating how strong demand is.

Why investors think growth forecasts may be conservative

Analysts have projected strong multi-year growth for Western Digital, including meaningful EPS growth and revenue growth. Bulls argue those projections could still be too low if AI-related storage demand accelerates further—especially as newer AI models become more data-hungry.

That’s the optimistic storyline: if demand remains tight and pricing stays strong, profit margins can improve, and earnings can rise faster than expected—even if the stock already went up a lot.

SanDisk: Smaller, Riskier, and Potentially More Explosive

SanDisk’s story is different because it was separated from Western Digital relatively recently (a spinoff). After spinoffs, stocks can behave dramatically because the market is trying to figure out what the stand-alone company is truly worth.

In percentage terms, SanDisk’s gains have been even more extreme than Western Digital’s. The original article described SanDisk as the riskier option—yet one that could outperform if the AI-driven storage boom keeps gaining strength.

Why “smaller base” moves can look shocking

When a company starts from a smaller valuation base, the stock can climb much faster (in percent terms) if investors suddenly see a brighter future. That doesn’t automatically mean the business is 10x better overnight—it often means expectations were too low earlier, or the market is repricing the company quickly.

Profit scale vs. market value: an important tension

One caution raised in the original discussion is that SanDisk’s profit level (net income in a referenced period) was far smaller than Western Digital’s, yet the market values of the two companies were not dramatically different. That can make some investors uncomfortable, because it suggests the market is pricing in very strong growth for SanDisk.

Still, a growth-heavy valuation can be justified if the company is positioned in the right part of the storage market at the right time.

HDD vs. SSD: The Storage Battle That AI Is Intensifying

Storage comes in different forms. Two big categories matter here:

• HDDs (Hard Disk Drives): typically cheaper per unit of storage and widely used for large-scale storage needs.
• SSDs (Solid State Drives): faster, often more expensive, and important for performance-heavy workloads.

AI data centers use a mix. They need fast storage for certain tasks—but they also need massive, cost-efficient capacity for storing and managing huge datasets over time.

Why shortages can drive price spikes

If supply can’t keep up with demand, pricing can rise quickly. The original report highlighted the idea of a NAND shortage contributing to higher SSD prices. When SSD prices surge, spending patterns can shift—some buyers may delay upgrades, while others may lean more heavily on HDDs for bulk storage.

This dynamic creates an interesting twist: even if SSD demand is “hot,” expensive SSDs can also make HDD solutions more attractive for some large customers trying to manage budgets at scale.

Market Share and Competitive Positioning

Investors also care about how these companies stack up against competitors. The original report noted that Western Digital is a major force in the HDD market and competes closely with other large storage players.

In enterprise SSD and broader flash storage markets, competition is intense, involving multiple global technology firms. That means pricing power can be strong during shortages, but it can also weaken fast if supply expands or demand cools.

The Core Bull Case: “This Isn’t a Typical Cycle”

Storage has historically been cyclical. In many past periods, demand rose, companies expanded supply, prices fell, profits dropped, and stocks suffered. What makes the current situation feel different to many investors is the belief that AI data center growth may persist longer and remain stronger than older cycles.

Supporters of these stocks argue:

• AI workloads are growing fast and may keep expanding for years.
• Data center buildouts continue as cloud firms race to stay competitive.
• Storage demand isn’t optional—AI systems require massive datasets and repeated training runs.
• Supply can’t instantly scale without major investment and planning.

If those points remain true, higher valuations may be easier to defend—because earnings can potentially keep rising.

The Bear Case: What Could Go Wrong From Here?

Even when the long-term story looks strong, investors should remember that extreme stock moves can reverse quickly. Here are some of the biggest risks that could hurt SanDisk and Western Digital from these elevated levels:

1) Hyperscaler spending slows

If the biggest cloud players reduce AI hardware spending—due to economic pressure, weaker revenue growth, or a shift in strategy—storage demand could cool. Since the rally is tied closely to AI infrastructure expectations, a spending slowdown could hit both sentiment and earnings.

2) The storage market turns cyclical again

Storage has a long history of booms and busts. If supply increases or demand pauses, prices can fall. When pricing declines, profits can drop sharply because manufacturing and operations have large fixed costs.

3) Competition compresses margins

Competing firms don’t sit still. If rivals ramp up production, launch better products, or undercut prices, the “scarcity premium” can fade. That’s especially important in NAND/flash markets, where multiple global players have meaningful scale.

4) Valuation risk and “great expectations”

After a huge run, a stock can fall even if the company is doing fine—simply because expectations got too high. When investors price in near-perfect growth, even a small disappointment can trigger a big sell-off.

5) Execution risks after a spinoff

For SanDisk, operating independently comes with challenges: corporate costs, strategy resets, customer relationships, supply chain decisions, and investor communications. Sometimes spinoffs thrive—but sometimes the adjustment period creates unexpected turbulence.

What Investors and Readers Should Watch Next

If you’re following these companies—whether for a school project, a market watchlist, or general interest—there are practical indicators that often shape the next chapter:

• Earnings and guidance: Do management teams raise forecasts or sound cautious?
• Pricing trends: Are SSD/NAND prices still rising, flattening, or falling?
• Data center demand signals: Are cloud companies still building aggressively?
• Inventory levels: Rising inventories can hint at slower demand ahead.
• Product cycles: New high-capacity drives or faster enterprise SSDs can shift competitiveness.

A Careful Bottom Line

SanDisk and Western Digital have benefited from a simple reality: AI is hungry for storage, and the world is racing to build the infrastructure to feed it. That theme—combined with strong demand signals and recent performance—helps explain why both stocks have surged so dramatically.

At the same time, huge one-year gains can create a dangerous mix of excitement and overconfidence. Storage markets can change quickly, and valuations can swing hard when sentiment shifts.

Important note: This article is informational and educational only and is not financial advice. If someone is considering investing, they should research multiple sources, understand the risks, and consider talking with a qualified financial professional.

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