Sandisk and Western Digital have both reported solid quarterly results, with Sandisk delivering better gross margins than expected and Western Digital beating expectations despite a guidance disappointment. However, both companies’ stocks have taken a hit in premarket trading, with SanDisk down 11% and Western Digital down 16%.

Sandisk reported revenue of $8.97 billion, above GS at $8.84 billion and the Street at $8.71 billion, while gross margin of 84.6% was in line with GS at 84.3% but above the Street at 83.6%. Non-GAAP EPS of $39.25 was also above GS at $38.16 and the Street at $35.45. The company has also updated the status of its customer supply agreements (or NBMs), negotiating 10 agreements with 8 unique customers, covering around 50% of its planned FY27 bit capacity and 65% of planned FY28 bit capacity. These contracts have a total contract value of $94 billion over time, including $16.5 billion in guarantees.

However, SanDisk guided 3Q below the Street on revenue and gross margin, with revenue guided to $10.55 billion at the midpoint, which is below GS at $11.65 billion and the Street at $11.15 billion. Gross margin was guided to 84.0%, below GS at 84.7% and the Street at 86.7%. Non-GAAP EPS guidance of $44.00 – $46.00 (midpoint of $45.00) is also below GS at $49.95 and in line with the Street at $45.34.

Western Digital also reported solid results, beating expectations with revenue of $8.71 billion, above GS at $8.62 billion and the Street at $8.50 billion. Gross margin was 84.9%, above GS at 84.6% and the Street at 83.9%. Non-GAAP EPS of $4.71 was also above GS at $4.59 and the Street at $4.42. The company guided 3Q revenue below the Street, with revenue guided to $8.65 billion at the midpoint, which is below GS at $9.05 billion and the Street at $8.75 billion. Gross margin was guided to 84.5%, below GS at 84.7% and the Street at 86.3%. Non-GAAP EPS guidance of $2.10 – $2.30 (midpoint of $2.20) is also below GS at $2.45 and in line with the Street at $2.20.

Overall, while both companies have delivered solid results, their guidance for the next quarter has been a disappointment to investors. However, the update on customer supply agreements provides a positive outlook for the company’s future revenue growth.