Western Digital Vs. Sandisk: The Better Way To Play The H…

Western Digital: A more conservative AI data storage play

Western Digital and rival Seagate together hold an estimated 85% of the market of the hard disk drive (HDD) market. And the company’s fourth-quarter fiscal 2026 results show just how well Western Digital’s position is paying off, with sales rising 44% to $3.8 billion and non-GAAP (generally accepted accounting principles) earnings more than doubling to $3.56 per .

Storage demand is so high that Western Digital can charge far more for its products than before. Gross margins accelerated in the fourth quarter to more than 54% — up 13 percentage points from the year-ago quarter. That’s especially important for potential investors because Western Digital’s margins tend to increase more conservatively than those of Sandisk’s, as hard drives are less prone to boom-and-bust cycles than flash memory.

Margins are rising as AI data centers fuel intense demand for storage, and Western Digital believes more is on the way, with data lake volume (raw data from enterprises) expected to increase by 25% or more over the next three years.

Management said first-quarter non-GAAP gross margins will be about 55.5% and sales will increase about 45% to $4.1 billion, at the midpoint of guidance. Non-GAAP earnings are expected to more than double again, to about $4 per .

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NASDAQ: WDC

Western Digital

Premium Feature

Moneyball Superscore

80/100

Today’s Change

(-10.22%) $-47.27

Current Price

$415.29

Key Data Points

Market Cap

$150BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$396.57 – $427.71

52wk Range

$112.52 – $799.87

Volume

24.8M

Avg Vol

7.5M

Gross Margin

48.83%

Dividend Yield

0.13%

Sandisk: A riskier AI memory play

Most of Sandisk’s business is focused on NAND flash memory and enterprise data center storage. NAND memory has become critical for AI data centers, and companies haven’t been able to get enough of it over the past several years, leading to soaring gross margins for Sandisk.

Sandisk’s gross margins were nearly 85% in the fiscal fourth quarter of 2026, an astonishing 58-percentage-point increase from the year-ago quarter.

Such rapid margin expansion helped push the company’s non-GAAP earnings per to $39.25 — up from $0.29 per in the year-ago quarter. Sales have also risen quickly, jumping 372% to $8.9 billion in the quarter.

And the good times ly aren’t over yet. Sandisk CFO Luis Visoso estimates the NAND memory market will surpass $300 billion this year and “will approach $500 billion in revenue in calendar year 2027.”

Management is guiding for impressive growth in the first quarter too, with sales expected to increase 453% to about $10.5 billion and non-GAAP earnings to jump to $45 per , both at the midpoint. Meanwhile, gross margins will be in the range between 83% and 85%.

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NASDAQ: SNDK

Sandisk

Premium Feature

Moneyball Superscore

78/100

Today’s Change

(-3.79%) $-67.70

Current Price

$1,719.99

Key Data Points

Market Cap

$252BMarket cap calculated using publicly traded s outstanding only. Does not include unlisted, private, or dual-class non-traded s. Implied market cap may vary.

Day’s Range

$1713.47 – $1774.23

52wk Range

$115.68 – $2354.39

Volume

8.2M

Avg Vol

13.1M

Gross Margin

71.47%

Sandisk has the slight edge, but both benefit from AI

Sandisk and Western Digital are both benefiting from a surge in AI demand, but NAND memory prices tend to have more boom-and-bust cycles than hard drive storage prices. This means that if there’s an abrupt collapse in demand for NAND memory, Sandisk’s gross margins could decline quickly.

There’s a lot of debate right now about whether the AI boom is different from past demand cycles. I tend to think there are at least several more years of significant data center infrastructure spending that could fuel Sandisk’s sales.

Recent estimates show that global AI data center infrastructure capital expenditures could reach $7 trillion by 2030. That’s just an estimate, of course, but AI is clearly transforming every tech and software business right now and will continue to do so for many more years. That’s going to take a lot of physical hardware to meet this new demand.

If that spending continues, the potential returns for Sandisk and its high-margin NAND flash memory business could be higher than for Western Digital’s hard drive business. I think that gives Sandisk the edge over Western Digital right now.

But if you tend to be a little more conservative in your tech investments and are looking for a pure hard drive play, Western Digital is still a great stock to own, too.

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About the Author

Chris Neiger has been a contributing Motley Fool technology and automotive analyst since 2012. Before The Motley Fool, Chris was an automotive journalist for the BBC. He holds a master’s degree in journalism from Regent University and a bachelor’s degree from the University of Delaware.

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