Western Digital Gains from Peer Micron's Strong NAND Results

What happened

Bank of America raised its price target on Sandisk to $2,500 from $2,100 while maintaining a Buy rating. The upgrade followed strong earnings from Micron Technology, another major memory producer. The analyst firm expects NAND bit shipment growth of approximately 13% quarter over quarter and average selling price growth of roughly 35% for the June quarter. Sandisk, which split from Western Digital in February 2025, has surged 749% year-to-date and holds a 13% share of the global NAND market. In its most recent quarter, Sandisk reported $6 billion in revenue, up 251% year over year, with gross margins improving from 50.9% to 78.4%.

Why it matters

As Sandisk's former parent company, Western Digital remains closely linked to NAND market dynamics. The positive outlook for Sandisk reflects broader industry strength in NAND flash memory, driven by AI infrastructure buildout and data center expansion. Bank of America expects the supply-demand imbalance in NAND to persist through calendar 2027, which could support sustained pricing power across the sector. This environment benefits memory producers including Western Digital, which continues to operate in the NAND and hard drive markets. The analyst upgrade signals confidence that memory pricing strength will be more durable than previous cycles.

Bigger picture

The memory industry is experiencing unprecedented demand driven by AI applications requiring massive amounts of NAND flash storage for training data and cloud workloads. Global NAND revenue reached $46 billion in Q1 2026, representing 246% year-over-year growth according to Counterpoint Research. The three major HBM producers (SK Hynix, Micron, and Samsung) have prioritized high-bandwidth memory production, creating supply constraints in conventional NAND. However, the memory sector remains cyclical, and some market observers note emerging concerns about whether AI returns justify current infrastructure spending. Industry insiders currently expect the memory shortage to extend into 2028, though the timing of any cycle peak remains uncertain.

What to watch

Monitor Western Digital's next earnings report for commentary on NAND pricing trends and demand visibility. Key indicators include whether the company confirms similar pricing strength and bit shipment growth as forecasted for Sandisk. Watch for updates on product mix shifts toward higher-margin solutions and the proportion of contracts with fixed versus variable pricing. Broader signals include AI infrastructure spending trends from hyperscalers, any signs of demand moderation, and whether memory supply additions begin to normalize the market ahead of 2027-2028 expectations.