WDC's path is backed by its own guidance
According to a Nasdaq report, Western Digital may outperform Sandisk in the short-term recovery. The stock closed Friday at $544.84, which means it needs a 47% gain to return to its all-time high of $799.87. In comparison, Sandisk, which ended at $1,214.83, requires nearly a 94% increase to reach $2,354.39. For Western Digital, the path to recovery is more structured and supported by its own guidance.
The company reported a 45% rise in third-quarter revenue, reaching $3.3 billion. Management projected fourth-quarter revenue of $3.65 billion, suggesting growth of between 36% and 44% from the previous year. It also expects adjusted earnings per share to rise to about $3.25, up from $2.72 in the prior quarter. CEO Irving Tan highlighted that the company began calendar 2026 with strong performance in both sequential and year-over-year revenue, along with expanding gross and operating margins.
To return to its former peak, Western Digital would need roughly 47% in earnings growth. Its fourth-quarter guidance suggests about 20% of that could be achieved in a single quarter. If this trend continues over the next few quarters, the recovery might be fully realized.
SNDK’s rebound depends on rising prices
While Sandisk is moving faster, it faces a more significant challenge in reaching its old high. The company reported a 251% rise in third-quarter revenue, hitting $5.95 billion, and earned $23.03 per share. Management is forecasting fourth-quarter adjusted earnings of $30 to $33 per share, a 28% to 41% increase over the previous quarter.
The issue lies in the magnitude of the task. Based on current guidance, Sandisk's annualized earnings would be around $126 per share. To return to its peak without a higher valuation, the company would need to reach earnings power near $245 per share. That would be nearly double the latest reported earnings, an extraordinary level even by historical standards.
Despite having signed five multi-year customer agreements with firm commitments and operating without debt, Sandisk remains in a volatile industry. The company shifted from losses a year earlier to earning $23.03 per share in the latest quarter. These extreme swings show the risks tied to depending on current performance for future projections.
August 5 report is first test of the prediction
Both Western Digital and Sandisk are set to release their fourth-quarter results on Wednesday, August 5. This will be a critical test for the prediction. Western Digital will need to confirm its guidance and show continued progress. Sandisk, however, must demonstrate that its pricing assumptions can withstand scrutiny and remain viable.
This analysis does not suggest either stock is a buy at these levels. The storage industry is cyclical, and the 26% one-day surge in Sandisk reflects the high expectations already embedded in both companies. However, between the two, the recovery supported by guidance is more likely to be achieved before the one that requires prices to keep breaking records.
The main difference lies in how each company's recovery is structured. Western Digital's guidance outlines a clearer and more structured path, while Sandisk's success depends on the continued rise in prices, which remains uncertain despite current market optimism.
In sum, Western Digital's path is more predictable and grounded in its own guidance, making it a stronger candidate for short-term gains. Sandisk, although moving at a faster pace, faces a bigger challenge due to the need for continued price increases, which is a more uncertain and volatile factor in the industry.
The key takeaway is that investors are watching the August 5 reports closely. Western Digital will aim to meet or exceed its guidance, while Sandisk will need to convince the market that its assumptions about pricing sustainability are realistic. The results from these reports will be crucial in determining how each company's recovery plays out in the coming quarters.
For now, both stocks are seen as high-risk, high-reward opportunities. However, the path laid out by Western Digital's management provides a clearer roadmap for recovery, whereas Sandisk's recovery hinges on factors beyond its control, such as the trajectory of NAND pricing and market demand.
The broader context of the storage industry, with growing demand for AI data center infrastructure, supports both companies to some extent. Still, the difference in their strategies and the clarity of their guidance could ultimately decide which one rebounds more effectively in the short term.
Investors should remain cautious and monitor these developments closely.
In conclusion, while both companies have significant work ahead to return to their previous highs, Western Digital appears to have a more feasible and structured path based on its current guidance and performance. Sandisk, on the other hand, must navigate a more uncertain landscape where continued price increases are essential to achieving its goals.
The coming quarters will be crucial for both companies. The market will be watching to see if Western Digital can continue its strong performance and if Sandisk can sustain its rapid growth in a volatile industry.