Sandisk blows past quarterly earnings expectations, forecasts blockbuster Q3 numbers

Yesterday, Microsoft reported strong earnings and revenue for its second quarter, but the stock plunged after-hours. Investors seem to have been concerned about so much of Microsoft’s booked contracts coming from one company — OpenAI — as well as its slowing cloud growth.

Today, it got worse. Microsoft shares sank 10%, suffering their largest single-day drop since the start of the Covid lockdown in March 2020.

Western Digital posted better-than-expected quarterly sales and earnings-per-share figures after the close Thursday, though the shares slipped after-hours. 

Here’s how the results looked:

• Fiscal Q2 revenue of $3.02 billion vs. the $2.93 billion consensus analyst expectation, per FactSet.

• Adjusted earnings per share of $2.13 vs. the $1.93 analysts predicted.

• Fiscal Q3 guidance for adjusted EPS of $2.15 to $2.45 vs. analyst estimates of $1.99.

• Guidance for Q3 sales of $3.1 billion to $3.3 billion vs. estimates of $2.98 billion.

Western Digital — and rival Seagate Technology Holdings — were among the market’s best performers last year, rising 282% and 219%, respectively, as data storage became a key bottleneck for hyperscalers. 

The shares are romping into 2026 as well, with both stocks up more than 60% in January through the close of trading on Thursday. 

Good results? Doesn’t matter. Good guidance? Doesn’t matter. Spending a ton to augment your business with AI? You’d better believe it doesn’t matter.

This earnings season, investors have decided that AI is enough of a long-term threat to the earnings power of software companies that the past three months or the next 12 are, at best, the calm before the storm. And heaven help management teams that didn’t offer strong results or a positive outlook.

The slow burn in software stocks has erupted into an all-out bonfire on Thursday, fueled by traders finding any excuse to sell Microsoft and ServiceNow after both reported robust quarterly results. The follow-through is weighing on the likes of Atlassian, Workday, Salesforce, Datadog, and Intuit. Put it all together and iShares Expanded Tech Software ETF is poised for its worst day since the Friday following the Rose Garden reciprocal tariff announcements in April 2025.

Here’s how an assortment of software companies have done on the session after reporting earnings:

Are there babies being thrown out with the bathwater here? Maybe. Probably, even!

But it likely won’t inspire too much confidence to learn that the last time the S&P 500 Software & Services industry group was down at least 20% over a 63-session stretch while the SPDR S&P 500 ETF was positive happened to be June 12, 2000.