Post

Let's talk about the reaction of storage stocks after this earnings report wave; I really can't quite understand it. SanDisk's Q4 revenue was $8.97 billion, a year-over-year surge of 372%. Adjusted EPS was $39.25, 135 times that of the same period last year. Gross margin hit 84.6%. Data center business revenue doubled quarter-over-quarter and surged 1298% year-over-year. They also approved a $14 billion buyback. Western Digital was similar, with revenue of $3.75 billion, up 44% year-over-year, adjusted EPS of $3.56, up 109% year-over-year. Net profit soared 12 times. Any single earnings report alone is a dominating performance. And then? SanDisk fell 7% after hours, Western Digital dropped 11%. The next day pre-market, SanDisk continued down 8%, Western Digital down 15%. The Asia-Pacific market followed suit, with the South Korean composite index dropping over 5%, SK Hynix down nearly 10%, Samsung Electronics down over 6%. The better the performance, the harder the fall. This script has been replayed repeatedly this year—SK Hynix fell 30% intraday after Q2 earnings, Samsung's profit surged 1810% but its stock price fell 6%. Where's the problem? It's in the guidance. SanDisk's next quarter revenue guidance is $10.3 to $10.8 billion, midpoint $10.55 billion. What was the market expectation? $10.8 to $11.16 billion. A difference of less than $600 million caused a 9% stock price collapse. Western Digital is even more unfair; next quarter revenue guidance midpoint is $4.1 billion, actually higher than analysts' expectation of $4.06 billion. Yet it still fell 15% after hours. Goldman Sachs analysts said it bluntly: "The core contradiction currently facing the storage industry is not a deterioration in fundamentals, but that market expectations have outpaced reality." #AIMemoryBullTest #FedHawksVsWeakJobs #SpaceXUnlockRebound