Storage stocks slide 16% as memory selloff hits Seagate, Western Digital

Storage and memory stocks tumbled Thursday, with Western Digital sliding 16 percent and Seagate Technology dropping 6 percent after SanDisk's revenue forecast missed consensus.

"The sell-off looks absurd given the durability of the demand backdrop," said Brian Sozzi, chief investment officer at Yahoo Finance, after Western Digital and SanDisk both beat fiscal Q4 estimates but failed to clear a bar set by year-to-date gains of 202 percent and 469 percent.

SanDisk delivered non-GAAP EPS of $39.25 on revenue of $8.97 billion, with data-center revenue up 103 percent sequentially to $2.98 billion. Its Q1 FY27 revenue guide of $10.3 billion to $10.8 billion landed below the $10.8 billion consensus. Western Digital guided Q1 revenue to $4.1 billion. Micron Technology fell 6 percent to $844, and the Roundhill Memory ETF declined 7 percent to $50.

The selloff marks the first major test of the AI storage trade, which had driven SanDisk up 469 percent, Micron up 213 percent, Seagate up 205 percent, and Western Digital up 202 percent year to date. Micron's fiscal Q4 2026 report in the coming weeks is the next event for the group.

Guidance Miss Triggers Sector-Wide Reset

The trigger was SanDisk's Q1 FY27 revenue guide of $10.3 billion to $10.8 billion, with the midpoint landing below the $10.8 billion consensus. CEO David Goeckeler said SanDisk now has over four years of demand visibility and signed five new long-term deals worth $94 billion in minimum revenue and $91 billion in remaining performance obligations. Western Digital's Q1 revenue guide of $4.1 billion was solid, but after a 202 percent YTD rally, solid was not enough for a stock priced for perfection.

Analysts Trim Targets but Stay Constructive

UBS lowered its Western Digital price target to $525 from $560 while keeping a Neutral rating, noting results were solid and it's hard to turn negative given management's beat-and-raise cadence. Barclays' Tom O'Malley calls SanDisk stock attractive on a pullback. Citi's Asiya Merchant opened an upside 90-day view on SanDisk stock, framing the pullback as an entry rather than a break. RBC struck a more cautious tone, warning that margins may be near peak with price growth moderating.

HBM Concerns and Cross-Asset Pressure

The selloff extended beyond US markets. SK Hynix fell 4.88 percent on the KOSPI after reports that Nvidia may use less high-bandwidth memory than planned in its Rubin Ultra AI chip, raising concerns over HBM demand. The KOSPI closed 0.60 percent lower at 6,258.77, extending Thursday's 4.58 percent drop. Brent crude futures climbed 3.8 percent to $82.49 a barrel as renewed Strait of Hormuz tensions weighed on risk appetite.

The bull case for the group rests on multi-year AI storage demand, contracted revenue visibility, and expanding datacenter mix. The bear case is that margins are peaking, valuations are stretched after huge run-ups, and sequential guidance is starting to decelerate. Investors sizing exposure through the Roundhill Memory ETF should note the concentration risk - Samsung Electronics, SK Hynix, and Micron represent 72 percent of net assets, making the fund behave less like a diversified sector bet and more like a leveraged wager on three names.

Prediction markets on Polymarket assign an 85.5 percent probability that Micron stock closes above $700 by month-end, a sign that traders view the sympathy selloff as overdone. Options positioning tells a mixed story, with WDC's full-chain put/call ratio at 0.82 and MU's at 0.72.

This article is for informational purposes only and does not constitute investment advice.