Goldman Sachs: SanDisk and Western Digital Post Strong Results but Expectations Were Too High — Shares Likely to Face Pressure
N.R. Finch
SanDisk and Western Digital both posted beats on revenue, margins, and EPS, yet Goldman says market expectations had already run too far ahead of fundamentals — guidance that merely meets forecasts will read as a negative, and both stocks are likely to sell off post-earnings.
How did Western Digital actually score this quarter?
Fiscal Q2 revenue hit $3.747 billion, up 43.8% year-over-year, roughly in line with both Goldman's and consensus estimates.
The real standout was margins: non-GAAP gross margin came in at 54.4%, beating consensus by roughly 200–250 basis points. This means → Western Digital pocketed meaningfully more per hard drive sold than Wall Street had modeled.
Non-GAAP EPS of $3.56 topped the Street's $3.35 consensus by about 4%–6%.
If it beat expectations, why would the stock drop?
The issue is forward guidance: Q3 revenue guidance midpoint of $4.1 billion broadly matched Goldman's and consensus forecasts — no upside surprise.
In plain terms = the market had already priced in "hard-drive prices keep rising + cloud capex keeps surging." When the company said "we'll track the plan," investors heard "no extra upside."
Goldman keeps a Neutral rating with a 12-month target of $650, implying roughly 18.5% upside from the then-price of $548.56.
How did SanDisk perform this quarter?
Q2 revenue reached $8.965 billion, a 371.6% year-over-year surge, beating consensus by about 2.9%.
Non-GAAP gross margin hit 84.6%; non-GAAP EPS came in at $39.25, topping consensus by roughly 3%–11%.
This means → on a pure backward-looking basis, SanDisk cleared nearly every bar Wall Street had set.
Where is SanDisk's problem?
Q3 revenue guidance midpoint of $105.5 billion fell 9.5% below Goldman's estimate and 5.4% below consensus — the real negative signal.
Guided gross margin midpoint of 84.0% trailed consensus of 86.7% by about 267 basis points. In plain terms = the Street was betting that NAND flash — the memory chips used widely in phones and data centers — would keep commanding higher prices, but SanDisk itself said "next quarter won't be as strong."
Even after a roughly 40% pullback from June highs, Goldman sees further downside risk from lingering over-optimism. The bank keeps a Buy rating and a $2,200 target, implying about 54.1% potential upside from the then-price of $1,427.62.
Will Micron get dragged down too?
Goldman explicitly flags that SanDisk and Micron share heavy end-market overlap — the negative reaction to SanDisk's report is expected to spill over into Micron's stock.
This reflects the central tension across the memory sector: fundamentals have not deteriorated, but expectations have outrun reality.
In plain terms = these companies are genuinely earning more money, but the stock prices had already baked in future growth — once the pace falls short of imagination, sentiment sells first and asks questions later.
Content is for reference only, not financial advice.