Storage Giants Drop 10% on Weak Guidance, Sparking AI-to-Crypto Rotation

Woofun AI reports that SanDisk (SNDK) and Western Digital (WDC) shares declined 10% in pre-market trading Thursday, a sharp reversal despite the companies posting robust quarterly financial results. The disconnect between strong past performance and immediate market reaction highlights growing investor sensitivity to forward-looking metrics in the storage sector.

The financial backdrop for both entities was exceptionally strong. SanDisk recorded a record fourth-quarter revenue of $8.97 billion and non-GAAP EPS of $39.25, significantly exceeding market expectations. Western Digital also delivered a double beat, with revenue reaching $3.75 billion, a 44% increase year over year, while its gross margin expanded to 54.4%. Despite these achievements, both stocks are currently trading approximately 50% below their all-time highs. Over the past 12 months, fueled by the AI boom, SanDisk surged more than 3,000% and Western Digital rose 550%, leaving assets such as crypto and precious metals behind.

Woofun AI data shows the sell-off was triggered primarily by guidance misses and high valuation expectations. SanDisk’s first-quarter outlook projected revenue of $10.7 billion, falling short of the $11.2 billion analysts had estimated, while its EPS guidance also disappointed. Although Western Digital’s first-quarter outlook remained solid, investors expected another blowout beat following a 500% run. To support valuations, SanDisk’s board of directors approved an additional $14 billion share buyback program, bringing total authorization to $15.5 billion.

However, with the AI trade beginning to stall, a rotation appears to be taking shape.

Market indicators suggest capital is shifting away from overextended tech stocks. Gold has risen more than 7% over the past few days, while bitcoin is holding above $64,000, showing little reaction to the Coldcard exploit. Crypto traders may interpret this resilience as a change in momentum, reversing the prevalent narrative where investors rotated capital into AI, making bitcoin one of the major casualties.