Sandisk and Western Digital drop 10% despite strong earnings

Sandisk (SNDK) and Western Digital (WDC) fell 10% in pre-market trading on Thursday, despite reporting strong quarterly results. Sandisk achieved record fourth-quarter revenue of 8.97 billion dollars and non-GAAP EPS of 39.25 dollars, exceeding expectations. Western Digital reported revenue of 3.75 billion dollars, a 44% year-over-year increase, with a gross margin of 54.4%. However, both stocks are trading about 50% below their all-time highs due to disappointing guidance. Sandisk's first-quarter revenue outlook of 10.7 billion dollars fell short of the 11.2 billion dollars analysts anticipated, and its EPS guidance was also below expectations. While Western Digital's first-quarter outlook was solid, investors expected a significant beat after a 500% stock run. Over the past year, Sandisk and Western Digital have surged more than 3,000% and 550%, respectively, driven by the AI boom, overshadowing assets like crypto and precious metals. Additionally, Sandisk's board approved a 14 billion dollar share buyback program, increasing total authorization to 15.5 billion dollars. As the AI trade shows signs of stalling, gold has risen over 7% recently, and bitcoin remains above 64,000 dollars, indicating a potential shift in market momentum.