#There is attention After-hours earnings reports: SanDisk, Western Digital test storage boom in AI era The most important report tonight is related to the data storage sector; Where SanDisk and Western Digital release their financial results at a very critical time for the AI investment trend. Both companies have been among the biggest market winners this year. SanDisk has been the best performer among the stocks with a growth of about 400% since the beginning of the year. This growth has been due to lack of supply, increase in memory prices and surge in data center demand. However, both stocks have seen a significant correction from their June highs. So tonight's report will determine whether the decline was simply profit-saving or the beginning of a downward spiral in the memory industry cycle. Notably, SanDisk was also the largest holding of the Situational Awareness fund before the fund collapsed; An issue that probably created artificial selling pressure on the stock. Expectations from SanDisk Market expectations are very high: Revenue: $8.5 billion Adjusted earnings per share (EPS): $34.60 This is despite the fact that the income of the data center sector in the previous quarter had grown by 233% compared to the previous quarter. Investors will pay attention to the following: The price of NAND memories Corporate discipline in supply management Long-term contracts with customers Management's perspective on the sustainability of current earnings Investor Day will be held next week. Management may therefore refrain from providing long-term guidance tonight. In terms of valuation: If the company hits estimates, the annualized P/E ratio will be around 10. But the market expects next season's profit to reach $46.33 and next year's profit to reach $210.88. In this case, the Forward P/E will be around 6.7. We believe that for the upward trend of the stock to continue, the company should publish both a better than expected report (Beat) and provide strong guidance (Strong Guidance). The interesting thing is that the profit for the fiscal year ending June 2025 was only $2.99 per share; Therefore, the evolution of the company's profitability has been almost unprecedented. Expectations from Western Digital Western Digital focuses more on the hard disk and mass storage market. Market expectations: Revenue: about 3.7 billion dollars Adjusted earnings per share: $3.30 to $3.35 Investors pay more attention to the following than the main numbers: Demand power of large cloud companies (Hyperscalers) Gross profit margin Contracts and orders of 2027 The market wants to make sure that big tech companies' investment in storage infrastructure remains strong and that increased supply won't cause prices to fall too quickly. Other important reports tonight In addition to these two companies, other important reports are also published: AppLovin (volatile stock) MercadoLibre (index of consumption and payment situation in Latin America) Axon e.l.f. Beauty TTM Technologies Redwire Albemarle (depends on lithium price) Beyond Meat (market focus on liquidity and company survival) Summary: Tonight is one of the most important tests of the financial reporting season for the AI industry. Currently, the market has very high expectations from SanDisk and Western Digital; Therefore, even good results may not be enough, and companies need to provide a very positive outlook in addition to strong performance to maintain the upward trend of their shares.
