On Wednesday, Sandisk (SNDK) experienced a decline in its stock, dropping by as much as 8% in after-hours trading. This downturn was primarily driven by the company's revenue outlook for the first quarter of its fiscal year, which fell short of analysts' projections.
Sandisk anticipates its Q1 revenue to fall between $10.3 billion and $10.8 billion, while experts had estimated it would reach approximately $11.16 billion. Although the company reported a record gross margin of 84.6% in the previous quarter, its forecast for 2027 suggests a slight decline, with margins expected in the range of 83% to 85%.
In its recent fiscal fourth quarter, Sandisk recorded revenues of $8.79 billion, surpassing Wall Street's consensus estimate of $8.64 billion. The increase in revenue was attributed to a combination of one-third higher sales volumes and two-thirds higher pricing.
Management indicated that demand from customers is currently outpacing supply, leading to an expectation that memory products will remain limited beyond the year 2027. This means Sandisk will continue to allocate its memory supply among customers rather than fully meet the demand.
Since the earnings call in April, the company has pursued new business model agreements, including three with new clients and two expansions of existing contracts, which reflect a long-term demand trend. These contracts can last up to five years, with an average duration exceeding four years.
According to Sandisk CFO Luis Visoso, "The total expected revenue from all our New Business Models we have signed is a minimum of $93.9 billion, assuming floor pricing. We believe actual revenue will exceed this minimum." Pricing in Sandisk's non-New Business Model segment will be subject to market fluctuations.
In notable financial results, the company reported adjusted earnings per share of $39.25, exceeding estimates of $34.37. For the current quarter, Sandisk projects adjusted EPS between $44 and $46, compared to analyst predictions of $45.58.
Having spun off from Western Digital (WDC) in February 2025, Sandisk has been a major winner in the stock market this year, particularly as memory and storage have emerged as critical components in developing AI infrastructure.
Earlier this week, shares of Sandisk rose after the company, in partnership with SK Hynix (SKHY), introduced a hardware blueprint aimed at enhancing the efficiency and cost-effectiveness of AI chips. This collaboration intends to establish a unified standard for high-speed memory, which could help lower data center costs and promote the swift deployment of advanced AI applications.
Year-to-date, Sandisk’s stock has surged nearly 490%, making it the top performer in the S&P 500 since the start of 2026. Wall Street remains bullish on the stock, with 25 Buy ratings, 5 Hold ratings, and no Sell ratings, while the average price target sits just above $2,400.
