AMD Pullback Makes It a Hold, Not a Buy, Morningstar Says; Sandisk and Western Digital Still Fully Priced

Earnings-Driven Pullbacks in AMD, Sandisk and Western Digital

On the Aug. 10, 2026 edition of The Morning Filter, Morningstar Chief US Market Strategist Dave Sekera and host Susan Dziubinski dissected three post-earnings stock drops. Advanced Micro Devices fell about 7% after reporting, even though second-quarter revenue rose 50% year over year and server CPU revenue jumped 75%. Morningstar left its $530 fair value estimate on AMD unchanged. Sandisk slipped roughly 7% and Western Digital dropped 13% after their results, while Morningstar made no significant changes to either fair value estimate.

The sell-offs followed exceptionally strong growth tied to the artificial-intelligence buildout. For AMD, demand for server CPUs remains intense because data centers need those processors to manage AI workloads. The company expects to begin selling its Helios AI rack in the fourth quarter, and Morningstar projects server CPU revenue to rise 70% in 2027, with data center revenue more than doubling. Still, AMD gave back a portion of its prior gains; the stock remains up 125% year to date.

Sandisk and Western Digital are different: both are benefiting from shortages in memory and hard disk drives, which have allowed them to price aggressively and earn unusually wide margins. But both stocks peaked in June. Sandisk is down about 48% from its high and Western Digital about 42%. After those declines, Morningstar now views all three stocks as 3-star — fairly valued — rather than deeply undervalued.

Morningstar’s Fair-Value Logic: AMD Is a Hold, Storage Names Remain Cyclical

AMD: The Fundamental Story Is Strong, but the Valuation Cushion Is Gone

Sekera emphasized that AMD's post-earnings decline is not a signal that the business is weakening. Revenue guidance beat expectations, and the server CPU shortage tied to AI workloads remains a powerful tailwind. The more important change is valuation: AMD traded at about a 10% premium to Morningstar's fair value at the end of June and has now pulled back to roughly $483, a 9% discount to the $530 estimate. That puts the stock in 3-star territory. In Sekera's words, it is now a hold, not a repeat of the January 2025 pick that has since gained roughly 300% or more.

Sandisk and Western Digital: The 2028 Peak Is the Central Question

The memory and hard-disk-drive names have a different risk profile. Morningstar sees shortages supporting unusually high margins for now, but forecasts the cyclical peak in early 2028, followed by a downturn into 2029 and 2030. Sekera acknowledged the uncertainty is unusually wide: if tight conditions last longer than early 2028, Morningstar's fair value estimates could be too low; if demand fades or supply expands sooner, they could be too high. That explains why he remains wary despite the sharp drawdowns.

Why a One-Day Drop Does Not Change the Investment Case

Dziubinski noted AMD's 7% drop and the larger declines in Sandisk and Western Digital, but Sekera cautioned against reading too much into any single day. A company can beat consensus and still fall if it fails to clear whisper numbers. For these AI-exposed names, the durable question is not the next quarter, but how long the shortage-driven pricing power lasts — and whether the stock already embeds that growth.

What the Valuation Reset Means for AMD, Sandisk and Western Digital Investors

For investors following Morningstar’s framework, the pullbacks reset expectations but do not create the deep discounts that existed when Sekera first highlighted AMD in January 2025.

• AMD: At about $483 against a $530 fair value estimate, the stock is roughly 9% below Morningstar's estimate and rated 3 stars. That supports a hold, not an aggressive buy, based on the strategist's comments.
• Sandisk: It is now in the upper end of Morningstar's 3-star range after falling about 48% from its June high, but the valuation still depends heavily on whether memory shortages last until the forecast early-2028 peak.
• Western Digital: Down about 42% from its high and also 3-star, it faces the same supply/demand timing risk in hard disk drives and memory; Morningstar made no significant fair-value change after earnings.
• Key signpost: The most consequential variable for Sandisk and Western Digital is whether AI-driven demand remains strong enough to delay the early-2028 cyclical peak that Morningstar expects. A sooner supply increase or demand fade would make current prices look less attractive.