Core Insights - SanDisk (SNDK) has surged 1,250% and Western Digital (WDC) has risen 400% over the past year, driven by significant investments in AI hardware by hyperscalers totaling $400 billion this year [1] - Western Digital exceeded Q3 EPS estimates by 13% and revenue estimates by 3.4%, indicating strong performance [1] - SanDisk trades at under 18 times FY 2027 earnings, while Western Digital trades at 22 times FY 2027 earnings, suggesting potential value in both stocks [1] Company Performance - SanDisk and Western Digital have experienced explosive growth due to the increasing demand for storage hardware in data centers, particularly driven by AI applications [1] - Western Digital's stock is perceived as undervalued despite trading at a premium compared to historical averages, with analysts expecting approximately 35% annual EPS growth and 17% annual revenue growth [1] - SanDisk, while smaller and riskier, reported $112 million in net income in Q3 2025, significantly lower than Western Digital's $1.2 billion, but has potential for higher growth due to AI spending [1] Market Dynamics - The ongoing data center buildout is not cyclical and has been consistent for the past three years, with expectations for further acceleration [1] - The NAND shortage has led to increased SSD prices, benefiting SanDisk as AI companies invest heavily in faster hardware [1] - Analysts suggest that if AI growth continues, SanDisk could outperform Western Digital, with potential for SNDK stock to double if the market values it at 35-40 times forward earnings [1] Investment Strategy - A balanced investment approach between SNDK and WDC is recommended, with a more aggressive stance on SNDK for those confident in sustained AI growth [1] - Western Digital's contracts are described as "stickier," which may provide stability in demand, especially if AI companies shift back to HDDs due to cost considerations [1]