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Western Digital (WDC -12%) is trading sharply lower despite reporting an impressive fiscal Q2 (Dec) beat-and-raise last night. Results were driven by accelerating cloud demand tied to higher-capacity storage and expanding AI workloads.

• Cloud revenue represented 89% of total sales, totaling $2.7 bln, up 28% yr/yr, driven by strong demand for higher-capacity nearline products. Client revenue accounted for 6% of total revenue, up 26% yr/yr. Consumer revenue represented 5% of total revenue, down 3% yr/yr.
• As AI capabilities expand, data generation and data value continue to rise, driving rapidly increasing demand for storage across training and inference workloads. • The combination of AI growth and cloud expansion is fueling a surge in demand for higher-density storage solutions.
• During the quarter, WDC shipped over 3.5 mln units of its latest-generation ePMR products, offering up to 26 TB CMR and 32 TB UltraSMR capacities. The company has also begun qualification of its HAMR and next-generation ePMR platforms with separate hyperscale customers. These platforms deliver significantly higher storage density versus conventional drives, enabling mass-scale data analysis.

Why the stock is lower: The primary driver appears to be a sell-the-news reaction. WDC shares have surged from roughly $50 in early June to $278 heading into yesterday's close, leaving the stock looking overbought. In addition, peer Seagate (STX) reported strong earnings earlier this week, suggesting that a beat-and-raise was largely priced in.

Another overhang emerged during the Q&A, when WDC stated that it intends to monetize its equity stake in SanDisk (SNDK) before the one-year anniversary of the separation on February 25, which is right around the corner. WDC currently owns 7.5 mln shares of SanDisk. Based on recent pricing, that stake is worth approximately $4.6 bln. Management indicated it is considering a debt-for-equity swap. Given SanDisk's outsized recent performance, WDC's stake has likely contributed meaningfully to the stock's sharp rally. An exit from the SanDisk position could therefore weigh on sentiment and remove a key supporting factor for WDC shares going forward.

Briefing.com Analyst Insight:

Western Digital delivered a strong operational quarter, underscored by accelerating cloud demand and growing confidence in its next-generation storage platforms tied to AI-driven workloads. However, with the stock already pricing in a near-flawless outcome, the results were not enough to sustain momentum. The planned monetization of WDC's SanDisk stake introduces an additional sentiment risk, particularly given how much value that stake currently represents. While long-term fundamentals tied to AI and hyperscale storage remain compelling, near-term upside may be capped as investors digest valuation, positioning, and capital structure uncertainty.

Deckers Outdoor (DECK) delivered a standout 3Q26 beat-and-raise, igniting a huge rally in the stock. The company crushed EPS and revenue expectations and raised its FY26 outlook comfortably above analyst forecasts. This performance is underpinned by the relentless growth of HOKA and the record-breaking resilience of UGG, both of which continue to benefit from disciplined marketplace management and a profitable shift toward direct-to-consumer (DTC) sales.

• Q3 revenue reached $1.96 bln (up 7.1% yr/yr), surpassing the FactSet consensus estimate of $1.88 bln.
• EPS hit $3.33, a record for the third quarter and a substantial beat against the $2.77 analyst forecast.
• HOKA revenue surged 18.5% to $628.9 mln, driven by strong full-price selling and the brand's return to the top position in performance run specialty.
• UGG revenue reached a record $1.31 bln (up 4.9%), supported by healthy demand across key seasonal franchises and resilient price elasticity.
• DTC net sales increased 8.1% to $1.09 bln, reflecting the ongoing strategic priority of owning the consumer relationship.
• International net sales jumped 15.0% to $756.7 mln, significantly outpacing domestic growth and highlighting a massive global white-space opportunity.
• Gross margin remained robust at 59.8%, supported by high levels of full-price selling and favorable brand mix.
• FY26 guidance was raised across the board, with revenue now projected between $5.40–$5.425 bln and EPS of $6.80–$6.85, both well ahead of consensus.

Briefing.com Analyst Insight

DECK’ Q3 results confirm that HOKA and UGG have transitioned into year-round growth engines that are successfully siphoning market share from legacy competitors like NIKE (NKE) and Adidas (ADDYY). HOKA's return to the top spot in run specialty, combined with UGG’s record $1.3 bln quarter, proves the portfolio's "must-have" status even in a promotional retail environment. While management flagged potential tariff headwinds for FY26, the raised guidance suggests they have ample levers, specifically pricing power and supply chain agility, to protect their industry-leading margins. Ultimately, DECK' ability to scale HOKA internationally while maintaining a clean wholesale marketplace provides a clear runway for continued valuation expansion.

KLA Corporation (KLAC) is sharply lower after reporting its Q2 (Dec) results last night. The company beat EPS expectations, though the upside was more modest than in recent quarters, while revenue increased 7.1% yr/yr to $3.3 bln, also better than expected. Q3 guidance essentially in line, with EPS of $8.30-$9.86 and revenue of $3.20-$3.50 bln.

• Growth continues to be fueled by AI-driven investment in leading-edge foundry/logic, HBM-led DRAM, and advanced packaging, with rising complexity keeping process-control demand elevated.
• Semiconductor Process Control revenue rose 9% yr/yr to $3.0 bln, split 60% foundry/logic and 40% memory, supported by scaling and a richer design activity and HPC/HBM-driven DRAM strength.
• Advanced packaging continued to grow as SoCs increase the value of process control in the package. CY25 Revenue was about $950 mln, up over 70% yr/yr, and expects mid-teens growth in CY26.
• Gross margin was 60 bps above guidance at 62.6%, but KLAC guided for a sequential step-down to 61.75% at the midpoint on weaker mix and higher DRAM chip costs, which it views as transitory.
• KLAC said its 2026 industry outlook has improved, expecting core WFE to grow in the high-single to low-double digits to the low-$120 bln range ($110 bln in 2025), with advanced packaging growing at a similar pace. That view is constructive but not as bullish as peer LRCX, which pegged 2026 WFE around $135 bln and sees advanced packaging up more than 40% yr/yr, outpacing overall WFE growth.
• Consistent with LRCX, KLAC expects CY26 to be back-half weighted, with mid-single-digit growth in 1H and acceleration in 2H, due to longer customer lead times from supply constraints.

Briefing.com Analyst Insight

KLAC continues to benefit from AI-led investment that is driving stronger demand for process control across its core markets. Foundry/logic and memory trends remain supportive, with leading-edge activity and HBM-led DRAM spending underpinning results, while advanced packaging continues to grow nicely as packaging complexity increases. That said, near-term factors are weighing on sentiment, including longer customer lead times and supply constraints that keep 2026 back-half weighted, along with a transitory margin headwind tied to higher DRAM chip costs and mix. With in-line guidance and KLAC's 2026 WFE view constructive but less bullish than LRCX's, the report likely didn't clear the high bar that growth investors were looking for after the stock's strong run. Even so, the longer-term AI and advanced packaging backdrop continues to support the broader growth story.

Apple (AAPL) is trading modestly lower despite delivering impressive fiscal Q1 (Dec) results, including its largest EPS upside in four years. While Apple is known for upside quarters, this one stood out as particularly strong. Revenue surged 15.7% yr/yr to a record $143.76 bln, well ahead of expectations. CEO Tim Cook described Q1 a "quarter for the record books," noting that iPhone demand was "simply staggering."

• Apple posted all-time revenue records in the Americas, Europe, Japan, and Rest of Asia Pacific, with growth across the vast majority of markets it tracks. Greater China revenue surged 38% yr/yr, driven by iPhone, which saw record upgraders and double-digit growth among switchers.
• iPhone revenue jumped 23.3% yr/yr to an all-time record $85.27 bln, well above the $78.65 bln Street estimate, driven by the iPhone 17 family. 
• Mac revenue declined 6.7% yr/yr to $8.39 bln, reflecting a difficult comparison against the M4 MacBook Pro, Mac mini, and iMac launches in the year-ago quarter. 
• iPad revenue increased 6.3% yr/yr to $8.6 bln, supported by an all-time record for upgraders.
• Wearables, Home, and Accessories revenue declined 2% yr/yr to $11.5 bln, impacted by supply constraints for AirPods Pro 3. Without those constraints, Apple believes the category would have grown.
• Services revenue rose 13.9% yr/yr to an all-time record $30 bln, roughly in-line with expectations. Records were set across advertising, music, payment services, and cloud services.

Why the stock is not reacting more positively: Apple cautioned that it expects constrained iPhone supply in Q2 (Mar), describing the situation as operating in "supply chase mode" amid exceptionally strong demand. Management acknowledged uncertainty around when supply and demand will rebalance. Constraints are being driven by limited availability of advanced semiconductor nodes used in Apple's SoCs. Additionally, Apple sees memory pricing increasing significantly, which may pressure gross margins in Q2 compared to the minimal impact seen in Q1.

Briefing.com Analyst Insight:

Apple delivered a standout fiscal Q1, highlighted by record revenue, massive iPhone upside, and continued strength in Services and emerging markets. However, the market's muted reaction reflects growing concern around near-term execution risks rather than demand. Supply constraints, rising memory costs, and uncertainty around gross margin pressure in Q2 are tempering enthusiasm following an otherwise exceptional quarter. While Apple's ecosystem strength and installed base expansion remain undeniable, the stock appears to be consolidating as investors wait for clearer visibility on supply normalization and margin durability.

SanDisk (SNDK) delivered a monumental 2Q26 earnings report, solidifying its position not just as a storage provider, but as a critical linchpin in the global AI infrastructure build-out. Despite facing a high bar with shares already up 160% since December, SNDK easily cleared the hurdle, sending the stock soaring to new all-time highs. The company crushed expectations across the board and issued Q3 guidance that wasn't just a beat -- it was in a completely different ballpark than analyst estimates. This step-change in performance is driven by a structural shift in the NAND market, where SNDK is successfully transitioning from a commodity-cycle player to a high-margin AI powerhouse.

• Q2 revenue reached $3.03 bln (up 31% sequentially and 61% yr/yr), significantly exceeding the guidance range of $2.55-$2.65 bln.
• Non-GAAP EPS hit $6.20, a massive beat against the FactSet consensus estimate of $3.62.
• Non-GAAP Gross Margin expanded to 51.1%, a staggering 21.2 ppt jump from the prior quarter, driven by higher ASPs, favorable product mix, and unit-cost improvements.
• Data Center revenue jumped 64% sequentially, fueled by the rapid adoption of enterprise SSDs by AI infrastructure builders and hyperscalers.
• Edge Computing revenue reached $1.68 bln, benefiting from the AI PC and high-end smartphone refresh cycle requiring larger, faster NAND capacities.
• Consumer revenue stood at $907 mln, maintaining stability as the company prioritizes higher-margin strategic channels during a period of limited supply.
• Q3 Guidance is historic, with revenue projected between $4.40–$4.80 bln (vs. $2.93 bln FactSet consensus) and EPS of $12.00–$14.00 (vs. $5.11 FactSet consensus).
• The company is currently on "allocation" across all end markets, with demand expected to exceed supply through at least the end of calendar 2026.
• Western Digital (WDC) confirmed during their call that they intend to monetize their remaining 7.5 mln shares of SNDK before the one-year anniversary of the separation. While a large secondary sale can sometimes create overhang, WDC’s preference for a debt-for-equity swap or a structured secondary suggests a controlled exit.

Briefing.com Analyst Insight

SNDK's Q2 results confirm that the memory industry is experiencing its strongest upcycle in 30 years. The expansion of gross margins to 51.1%, and the projection of 65-67% for Q3, signals a structural reset in profitability. By moving to multi-year agreements, SNDK is effectively dampening the historical volatility of the NAND market. This transition is underpinned by the ramp-up of BiCS8 technology, which significantly lowers the cost-per-bit while meeting the extreme endurance requirements of AI training clusters. Crucially, management noted that AI data center demand is no longer a commodity play but a strategic architectural necessity, as high-performance NAND is increasingly required to eliminate the storage bottlenecks that hinder GPU efficiency. SNDK's decision to maintain disciplined CapEx while on allocation suggests they are prioritizing bottom-line expansion over market share grabs, a strategy that is clearly resonating with investors. The sheer magnitude of the Q3 EPS guide indicates that the AI appetite for memory is much larger and more immediate than even the most bullish models predicted.