SanDisk stock tanked after earnings, but here’s why this sell-off may not last

SanDisk stock NASDAQ:SNDK plunged more than 5% in extended trading on Wednesday, adding to a 5.4% regular-session decline, even though the flash-memory company delivered results that would normally trigger a rally.

Adjusted earnings reached $39.25 a share, above Wall Street’s $34.96 estimate, while revenue of $8.97 billion beat the $8.48 billion consensus.

The problem was the outlook as SanDisk forecasted September-quarter revenue of $10.3 billion to $10.8 billion, leaving the midpoint slightly below analysts’ expectations.

SanDisk stock: High expectations triggered the fall

SanDisk’s fourth-quarter revenue rose 51% from the previous quarter and 372% from a year earlier. Adjusted earnings increased 68% sequentially, while gross margin expanded to 84.6% from 78.4%.

Those numbers show that the earnings cycle remains powerful. Datacentre revenue climbed 103% sequentially to $2.98 billion, offsetting a 32% decline in consumer sales to $556 million.

Yet management’s first-quarter revenue midpoint of $10.55 billion fell short of the roughly $10.8 billion analysts had modelled.

Adjusted earnings guidance of $44 to $46 a share was broadly aligned with consensus rather than dramatically above it.

That distinction mattered after SanDisk’s advance as the stock had been priced for near-perfect execution and repeated forecast upgrades.

The latest guidance challenged that perfection, but offered no clear sign that AI-related storage demand had weakened.

AI storage engine is still accelerating

SanDisk’s business is increasingly tied to enterprise and hyperscale customers rather than traditional consumer devices.

AI training, inference and software agents require fast storage, while limited new NAND capacity has preserved suppliers’ pricing power.

Wedbush analyst Matt Bryson expects earnings momentum to continue through fiscal 2027 and 2028.

He believes limited manufacturing additions and multiyear customer agreements should support pricing and profitability even as quarterly increases moderate.

Goldman Sachs analyst James Schneider had also raised his price target to $2,200 before the results, citing persistent NAND tightness and an improving mix of enterprise solid-state drives.

The quarter strengthened that argument, as datacentre sales more than doubled sequentially, while two-thirds of SanDisk’s revenue growth came from higher pricing.

The sell-off therefore reflects doubts about the valuation hurdle, not the direction of demand.

Long-term contracts could make this cycle different

The rebound case rests on SanDisk’s effort to reduce NAND volatility.

The company said it signed five customer agreements after announcing five in April.

Chief executive David Goeckeler told Reuters that eight agreements with six customers represent $93.9 billion of contracted value and run for about four years on average.

By fiscal 2027, roughly half of SanDisk’s output is expected to be sold under these arrangements, rising to about two-thirds in fiscal 2028.

Bank of America analyst Wamsi Mohan expects favourable NAND pricing to continue into mid-2027, Forbes reported, although sequential price increases may slow.

Bernstein has maintained an Outperform rating and a $3,000 target, saying long-term agreements offer “more meaningful downside protection” than older structures.