Western Digital, Seagate, Sandisk stocks are bracing for a major Micron event

Sandisk, Western Digital, and Seagate stocks have been in a strong rally this year and are the top gainers in the S&P 500 and Nasdaq 100 indices. SNDK jumped by 800% this year, while Western Digital, Micron, and Seagate have soared by 320%, 285%, and 280%, respectively. 

Sandisk, Western Digital, and Seagate face a major test this week

SNDK, WDC, STX, and MU stocks have been in a strong bull run in the past few years. This surge has also coincided with their international peers like Japan’s Kioxia, and South Korea’s SK Hynix and Samsung.

The surge is happening because of the ongoing artificial intelligence supercycle that has led to a surge in memory demand. Some of these companies have said that they are now operating at full capacity, with hyperscalers entering multi-year contracts.

This week will be important for companies in the memory industry as Micron will publish its earnings on Wednesday. These will be important earnings as they will shed color on whether the growth in the industry is accelerating or not. 

Micron is a major player in the memory industry, which explains why its market capitalization has jumped to over $1.2 trillion. It is the third-biggest name in the high-bandwidth memory industry after SK Hynix and Samsung.

Micron’s products are different from those made by Sandisk, Seagate, and Western Digital

To be clear: Micron makes different types of products from companies like Sandisk, Seagate, and Western Digital. Sandisk is a specialist in storage for consumers and enterprise customers, and is known for its SSDs and memory cards. 

Western Digital also makes consumer SSDs, hard drives, and external drives. Seagate makes hard drives and SSDs. Micron, on the other hand, makes memory chips known as DRAM and NAND. 

Despite this difference, its earnings will provide more information about the storage and memory industry as it is widely seen as a bellwether for the sector. If its earnings are stronger than expected, chances are that its stock will continue doing well, which will lead to a similar performance for these other companies.

On the other hand, a strong earnings report and weak guidance will lead to a major reversal not only among companies like Sandisk and Western Digital, but also in the broader indices like the Nasdaq 100 and S&P 500 Index. 

A good example of this is what happened a few weeks ago when Broadcom published its earnings. While its top-line numbers were strong, its guidance was weaker than expected, dragging its stock and that of the broader stock market.

Analysts are upbeat about Micron earnings

Most analysts are upbeat about Micron’s earnings as its earnings near. The average estimate is that its revenue jumped by 276% in the last quarter to $35 billion. This surge is driven by the growing demand for its products and the higher prices. 

This growth is expected to continue going on in the next quarters. The estimate among analysts is that revenue in the current quarter will soar by 270% to $41.8 billion. As a result, the annual figure is expected to be $113 billion this year, followed by $190 billion next year.

Micron’s revenue and earnings will likely be stronger than expected, as it has done in the past few quarters. 

Most notably, Micron and other firms like Seagate, Western Digital, and Sandisk are not overvalued. Still, the main challenge their stocks face is technicals as they are now getting overbought. That is a sign that they will retreat in the near future as investors start booking profits.