Western Digital is sold out of hard drives for 2026 because of AI

Bank of America's positive note on memory chip demand boosts Micron (MU), Western Digital (WDC), and SanDisk (SNDK) stocks. MU rose 4% to $913.77, WDC gained 5% to $362.32, and SNDK increased 3% to $1,271.99. The analyst cited longer customer contracts (3-5 years) as a stabilizing factor for the cyclical industry.

AI-related stocks rose Monday after Anthropic filed for an IPO, with Nvidia up 3% and Microsoft, Amazon, and others gaining. Analysts suggest a successful Anthropic IPO could reshape AI sector valuations, potentially diverting capital from tech giants. Shares of CoreWeave, Nebius, Micron, and others also increased. The broader semiconductor index rose over 3%.

Western Digital (WDC) reported Q1 fiscal 2027 revenue of $4.4B, EPS of $4.64, and free cash flow of $1.4B, exceeding expectations. The company forecasts Q2 revenue of $5.1B, gross margin of 60-61%, and EPS of $5.80. WDC's stock has surged 173.7% over the past year, driven by strong AI-driven storage demand and long-term customer visibility.

Western Digital (WDC) stock fell 3% to $343.67 on Friday, despite beating earnings estimates and providing strong guidance. The company reported fiscal Q1 2027 non-GAAP earnings of $4.64 per share, revenue of $4.38 billion, and forecasted Q2 revenue of $5.1 billion with earnings of $5.80 per share. The decline may reflect investor concerns about storage pricing and AI infrastructure financing. Sandisk (SNDK), which reports earnings on October 29, may be impacted by these trends.

Western Digital's CFO dismissed AI demand peak rumors, citing strong customer demand and diversified client base. Shares fell 3% due to a tripling in capital expenditures, which narrowed free cash flow margins. The company forecast adjusted EPS up to $6, above analyst estimates, and raised its dividend by 17%. Investors remain concerned about the pace of capacity expansion and revenue conversion.

AWS reported that customers have booked most of its 2027 capacity, with $220B planned for 2026 capital spending. NVIDIA and TCV invested in Higgsfield's Series B extension, with Higgsfield reporting a $1B annualized revenue run rate. Western Digital reported $4.381B in Q1 revenue, up 55% YoY, with a 57.8% gross margin.