Sandisk edges Western Digital as AI storage play

Both Western Digital and Sandisk have ridden the AI infrastructure spending boom to extraordinary share price gains over the past year. Western Digital, which along with rival Seagate holds an estimated 85% of the hard disk drive market, reported fourth-quarter fiscal 2026 sales rising 44% to $3.8 billion and non-GAAP earnings more than doubling to $3.56 per share. Sandisk, focused on NAND flash memory, saw its gross margins reach nearly 85% in the same quarter, a 58-percentage-point jump from a year earlier.

The two companies sit at different points of the AI storage supply chain. Western Digital's hard drives serve as bulk storage for data lakes, and management expects raw data volumes from enterprises to grow by 25% or more over the next three years. Sandisk's NAND memory is a critical component for AI data centers, where demand has outstripped supply for several years, driving up prices and margins. That scarcity has been a windfall for Sandisk, but it also makes the business more cyclical than Western Digital's.

The article's preference for Sandisk hinges on whether AI data center infrastructure spending continues at its current pace. Recent estimates put global AI data center capital expenditures at as much as $7 trillion by 2030, though that is just an estimate. If that spending holds up, Sandisk's higher-margin NAND business could deliver greater returns. If demand falters, Western Digital's steadier hard drive margins may prove more resilient. Either way, the outcome for investors depends on how long the AI infrastructure buildout lasts.