The AI Hardware Shakeout Hits Sandisk and Western Digital — Here’s Why Bitcoin Traders Care

Strong earnings from Sandisk and Western Digital were unable to calm investors, leading to speculation that capital may be shifting away from AI-focused stocks and potentially returning to assets such as crypto.

Sandisk (SNDK) and Western Digital (WDC), two companies that have benefited heavily from the AI-driven storage boom, fell around 10% in pre-market trading Thursday despite reporting better-than-expected quarterly financial results.

Sandisk delivered record fourth-quarter revenue of $8.97 billion and adjusted earnings per share of $39.25, exceeding market forecasts. Western Digital also posted a strong performance, with revenue reaching $3.75 billion, up 44% from the prior year, while gross margins expanded to 54.4%. Despite the strong numbers, both companies’ shares are trading roughly 50% below their previous record highs.

Investors focused more on future expectations than past results. Sandisk’s first-quarter revenue guidance came in below forecasts, with the company expecting $10.7 billion compared with Wall Street’s $11.2 billion estimate. Its earnings outlook also missed expectations. Western Digital provided a stronger forecast, but after a massive rally of nearly 500%, investors wanted another exceptional result.

The two companies have been among the biggest beneficiaries of the AI boom, with Sandisk gaining more than 3,000% and Western Digital rising over 550% in the past year. Their gains have far outpaced assets such as bitcoin and precious metals, which have struggled to attract the same level of investor enthusiasm.

Sandisk also announced an expansion of its stock buyback efforts, with its board approving an additional $14 billion repurchase plan, increasing its total authorized buybacks to $15.5 billion.

However, signs that the AI-driven rally may be losing momentum have raised the possibility of a market rotation. Gold has climbed more than 7% in recent days, while bitcoin has remained above $64,000 and showed little reaction to the Coldcard wallet security breach.

For crypto investors, the recent moves could point to a potential shift in market trends. A major theme of recent months has been the flow of capital into AI-related companies, with bitcoin and other digital assets viewed as beneficiaries left behind. If enthusiasm for AI stocks continues to fade, some of that capital could potentially move back toward crypto markets.