Key takeaways
- Sandisk’s fiscal fourth-quarter revenue surged 372 per cent to US$8.97 billion, while adjusted earnings rose from US$0.29 to US$39.25 per share.
- Shares fell as much as 13.3 per cent as investors focused on guidance that fell short of some forecasts following the stock’s fivefold 2026 rally.
- AI data-centre demand lifted annual revenue 175 per cent, with long-term customer agreements now worth at least US$93.9 billion.
Sandisk Corporation (NDAQ:SNDK) shares tumbled Thursday despite explosive profit growth and record revenue as investors concluded that the memory-chip maker’s outlook did not justify expectations embedded in one of Wall Street’s biggest artificial-intelligence rallies.
The stock fell as much as 13.3 per cent to US$1,178 during early trading before recovering some of those losses. Sandisk had risen nearly 470 per cent during 2026 heading into the results, leaving little tolerance for guidance that was merely strong rather than exceptional.
Adjusted earnings rise roughly 13,400 per cent
Sandisk reported fiscal fourth-quarter revenue of US$8.97 billion, up 372 per cent from US$1.90 billion one year earlier and 51 per cent from the previous quarter.
The result exceeded the approximately US$8.39 billion consensus estimate cited by Reuters.
Adjusted earnings reached US$39.25 per diluted share, compared with US$0.29 one year earlier. That represents growth of approximately 13,400 per cent and comfortably surpassed Wall Street’s estimate of roughly US$34.45.
The comparison requires some care, however. Sandisk’s reported net income swung to US$6.90 billion, or US$43.97 per share, from a US$23 million loss one year earlier. Because the previous GAAP result was negative, calculating a conventional percentage increase in reported profit would be misleading.
Adjusted net income increased from US$42 million to US$6.16 billion.
“We closed fiscal 2026 with a leading technology portfolio, established datacenter as a key growth pillar,” chair and chief executive David Goeckeler said in the company’s financial results.
Higher prices transform Sandisk’s margins
Approximately two-thirds of Sandisk’s sequential revenue growth came from higher prices, while increased sales volumes contributed the remaining third.
That pricing power drove the company’s gross margin to 84.6 per cent, compared with 78.4 per cent during the previous quarter and 26.2 per cent one year earlier.
Operating income reached US$7.04 billion, up 71 per cent sequentially. Operating expenses were almost unchanged from the previous quarter, allowing most of Sandisk’s additional gross profit to flow through to earnings.
The dramatic margin expansion reflects a global shortage of NAND flash memory, rising demand for enterprise solid-state drives and the industry’s decision to limit capacity expansion after previous cycles of oversupply.
Artificial-intelligence data centres require large amounts of high-performance storage alongside processors and high-bandwidth memory. That has strengthened demand for Sandisk’s products and allowed the company to negotiate higher prices and longer customer commitments.
However, the importance of pricing to Sandisk’s growth also explains part of Thursday’s selloff. Investors are now watching for signs that the pace of NAND price increases may be beginning to moderate.
Data-centre revenue more than doubles
Fiscal fourth-quarter data-centre revenue reached US$2.98 billion, more than double the US$1.47 billion generated during the previous quarter. The division produced only US$213 million one year earlier.
Edge revenue, which includes storage used in devices and computing systems outside centralized data centres, increased 392 per cent year over year to US$5.43 billion.
Consumer revenue was the only major category to contract. Sales fell 5 per cent year over year and 32 per cent sequentially to US$556 million.
For the full fiscal year, Sandisk generated US$20.25 billion in revenue, an increase of 175 per cent. Data-centre revenue climbed 437 per cent to US$5.15 billion, while Edge revenue nearly tripled to US$12.16 billion.
Annual reported net income reached US$11.43 billion, reversing a US$1.64 billion loss during fiscal 2025. Adjusted earnings rose to US$70.88 per share from US$2.99.
The figures demonstrate how quickly Sandisk has changed since separating from Western Digital Corporation (NDAQ:WDC) and returning to public markets as a standalone company in February 2025.
Strong guidance still misses investors’ expectations
Sandisk expects fiscal first-quarter revenue of between US$10.30 billion and US$10.80 billion. The midpoint of US$10.55 billion would represent sequential growth of approximately 18 per cent.
Adjusted earnings are projected between US$44 and US$46 per share, with an adjusted gross margin between 83 and 85 per cent.
By one measure, that outlook exceeded expectations. LSEG’s consensus called for revenue of US$10.47 billion and adjusted earnings of US$43.12 per share.
Other data providers placed expectations considerably higher, however. One widely cited consensus forecast called for US$11.15 billion in revenue and adjusted earnings of US$45.34 per share.
Sandisk’s revenue range therefore fell short of the higher forecast, while the midpoint of its earnings guidance was slightly below it. The projected gross margin also implies a modest decline from the fourth quarter’s 84.6 per cent result.
RBC Capital Markets attributed the softer-than-hoped outlook partly to moderating growth in average NAND selling prices. The concern is not necessarily that demand is weakening, but that the upside from each successive price increase may become smaller.
That distinction helps explain why sources described the same forecast as both above consensus and disappointing. Sandisk exceeded some published analyst averages but failed to clear the more ambitious expectations investors had attached to the stock.
Long-term contracts improve revenue visibility
Sandisk has been moving customers away from short-term purchasing arrangements and towards multi-year agreements intended to reduce its exposure to the memory industry’s traditional boom-and-bust cycle.
The company has eight agreements with six customers carrying a minimum combined value of US$93.9 billion, according to Reuters. Their median duration is four years.
Approximately half of Sandisk’s fiscal 2027 output is expected to be sold under those agreements. That proportion is forecast to increase to two-thirds during fiscal 2028.
The agreements include minimum purchase commitments and pricing protections designed to produce more durable margins. They also give Sandisk greater confidence when planning manufacturing capacity.
The trade-off is that locking in longer-term arrangements could prevent the company from capturing every short-term price increase during periods of severe supply shortages. Investors must therefore decide whether improved visibility is more valuable than maximum exposure to the current pricing cycle.
US$15.5 billion remains available for buybacks
Sandisk’s board approved an additional US$14 billion share-repurchase program, lifting its total remaining authorization to US$15.5 billion.
The company did not provide a fixed timetable for the purchases. The authorization gives management flexibility to repurchase shares depending on market conditions, available cash and alternative investment opportunities.
The size of the program signals confidence in Sandisk’s future cash generation. It could also provide support during periods of volatility, although an authorization does not require the company to buy any particular number of shares.
What investors should watch next
Sandisk will hold an investor day on August 13, when management is expected to provide further details about its long-term financial model, capital allocation and artificial-intelligence strategy.
Investors will be watching for evidence that the company can sustain gross margins near 80 per cent as additional customer agreements take effect.
High Bandwidth Flash will also remain in focus. Sandisk and SK hynix recently released the first technical specification for the technology through the Open Compute Project, with Google and Tenstorrent participating in the standardization process.
The technology is intended to provide high-capacity, high-speed storage for AI inference systems and could become another growth driver if customers adopt it at scale.
Sandisk’s latest quarter demonstrated extraordinary earnings power, but Thursday’s reaction showed that fundamentals are only part of the stock’s investment case. After a fivefold rally, investors are also measuring every forecast against expectations of continuing price increases, expanding margins and uninterrupted AI demand.