Summary of Conference Call Notes Industry Overview - The focus is on the North American hardware and storage sector, particularly HDD (Hard Disk Drives) and NAND memory markets - Positive sentiment surrounding storage demand is noted, driven by solid supply/demand dynamics and AI-related workloads transitioning to data centers [1][2] Key Companies Discussed 1. **Seagate Technology Holdings PLC (STX)** - Shares increased by over 28% since early September due to rising cloud storage demand and price increases [3][24] - Stable pricing and constructive supply/demand fundamentals are observed, with price increases announced by WDC [3][25] - Near-term challenges include capacity constraints and limited price impacts due to long-term agreements with hyperscalers [3][24] 2. **Western Digital Corporation (WDC)** - Shares rose over 40% since early September, reflecting similar trends as STX [3][25] - The company is focusing on areal density advancements (HAMR and ePMR) to sustain margin expansion [3][25] - Near-term factors affecting performance include capacity constraints and long-term pricing agreements [3][25] 3. **Sandisk Corp (SNDK)** - Shares surged more than 120% since early September, driven by strong cloud demand and price increases [10][23] - The company is experiencing tight production supply, with eSSDs benefiting from hyperscale demand for AI services [10][23] - Near-term challenges include QLC capacity constraints and qualification pace at hyperscalers [10][23] Core Insights and Arguments - **AI and Cloud Demand**: The transition of AI workloads to data centers is expected to drive demand for storage solutions, particularly HDDs and NAND flash [1][2] - **Price Increases**: HDD prices are expected to rise due to shortages, with HDD EB shortages projected between 150-250EB [2][10] - **NAND Shortages**: Continued NAND shortages are anticipated as eSSDs compete for limited NAND supply against existing demand from various segments [2][10] - **Earnings Estimates**: - For STX, FY26 EPS estimates increased to $11.27 from $11.15, reflecting robust cloud HDD demand [10][11] - For WDC, FY26 EPS estimates increased to $7.18 from $6.70, supported by a better margin outlook [14][51] - For SNDK, FY26 EPS estimates increased to $9.15 from $7.09, driven by strong hyperscaler demand [10][40] Target Price Adjustments - **Seagate (STX)**: Target price updated to $250 from $215, reflecting improving industry fundamentals [10][46] - **Western Digital (WDC)**: Target price raised to $135 from $110, aligned with market peer multiples [14][51] - **Sandisk (SNDK)**: Target price increased to $150 from $125, reflecting solid industry fundamentals [10][41] Additional Important Points - The overall sentiment in the storage sector is constructive, with expectations for continued demand growth and stable pricing [1][3] - The potential for elevated price competition and supply/demand imbalances remains a concern, particularly with aggressive competition from Chinese players [40][42] - The analysts maintain a "Buy" rating for all three companies, indicating confidence in their growth prospects despite near-term challenges [10][14][40]