After Big Pullbacks, Are These 3 Tech Stocks Worth Buying?
On the Aug. 10, 2026, episode of The Morning Filter podcast, hosts Susan Dziubinski and Morningstar Chief US Market Strategist Dave Sekera discuss the pullbacks in Advanced Micro Devices AMD, Sandisk SNDK, and Western Digital WDC after earnings. Here is an excerpt from the show.
Why the Market Pulled Back on AMD
Susan Dziubinski: All right. Well, Advanced Micro Devices AMD stock was down 7% after earnings, but Morningstar maintained its $530 fair value estimate on the stock. Dave, unpack the results on this one. What didn’t the market like?
David Sekera: Always hard to know what the market is assuming coming into earnings. I mean, you have consensus that gives you some guidance, but then there’s always the whisper numbers about how much the market is really trying to assume that a company, especially in a situation like this, can beat those whisper numbers. Now, in this case, second-quarter revenue was up 50% year over year, and that was better than expectations compared with consensus. Of course, as we’ve talked about with AMD, it’s really all about their server CPUs. Revenue there was up 75%. There is a shortage with the AI buildout boom. People need those CPUs in order to be able to manage all those AI workloads. If you look at the revenue guidance for this quarter, they easily beat it.
Looking forward, I think the market’s trying to understand how long they can keep posting these kinds of results. Our analyst noted a couple of positive aspects. In the fourth quarter, we think the company will start selling its first AI solutions rack called Helios. In 2027, we’re looking for server CPU business to be up 70%, the data center to be up probably over 100%. But I think it’s just a matter of: The stock ended up just giving up some of those prior-day gains. I wouldn’t read too much into the movement in any one particular day. I mean, overall, that stock is still up year to date, 125%.
Is AMD Stock Still a Buy?
Dziubinski: Now, AMD has been a stock pick of yours in the past. Is it attractive on pullback?
Sekera: It was a pick, but it was a pick a while ago. I have to mention, I think it was in January 2025. We actually picked it twice over the course of that month. Stock, I mean, it’s up 300% from the first time we picked it in January. Stock sold off in January, and so it’s up now 350% since that second time we listed it as a pick. Stock has skyrocketed since then, to the point that it was actually trading at a 10% premium at the end of June. We’ve had a pretty big pullback here. Last I saw, it pulled all the way back to $483, which compares with our $530 fair value estimate. It’s now at a 9% discount, which puts it still in that 3-star territory.
At this point, I would say, for lack of a better way of putting it, it’s a hold. We would expect that over the longer term, investors should be able to generate returns consistent with its long-term cost of equity, but certainly not anywhere near as undervalued as what we thought it was back at the beginning of 2025.
Why Sandisk and Western Digital Still Look Risky
Dziubinski: All right. Well, we saw a couple of other members of the “triple-digit club” report last week. Sandisk stock fell about 7% after earnings, and then Western Digital was down 13%. Morningstar didn’t make any significant changes to its fair value estimates on the stocks, and both stocks still look overvalued. What are your takeaways here, Dave?
David Sekera: Again, it’s kind of a similar story. I mean, the market knew that revenue growth here was going to be exceptionally strong for both of these companies. We’re expecting operating margin for both just on the amount of fixed-cost leverage that they can get with revenue growing as fast as it is. As we’ve talked about before with these companies and really all of these commodity-oriented technology hardware companies, while there are shortages in both the memory and hard disk drives, demand for the AI buildout boom is still exceptionally high. These companies can charge whatever they want to charge. They’re getting huge margins. The question becomes, at what point—or it’s really a combination—at what point does supply increase enough and/or demand starts to fade?
If you look at Sandisk, for example, we forecast that peak to be in early 2028, and then look for a downturn in 2029 and into 2030. I would just say that if this growth lasts longer than early 2028, our fair value could actually be too low here in this case. However, if it rolls over faster than 2028, our fair value is probably too high. These are ones where it’s really very difficult to try and dial into our specific fair value because there’s just a really wide range of probabilities of outcome here over just the next couple years, much less trying to understand what the long-term intrinsic valuation is based on the present value of the future free cash flow of the entire lifetime of these companies.
Both stocks peaked in June. Sandisk has sold off, down 48% from its highs. Western Digital, down 42% from its highs. They’ve fallen enough that they’re now in that 3-star range. Although I’d note that Sandisk is still in the upper end of that 3-star range. Both of these, with that negative momentum and the growth that’s built into these prices, I’m still pretty leery of these stocks, even though they’ve fallen as much as they have.
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