SanDisk’s Record Quarter Fails to Silence the Skeptics as Guidance Cools the Rally

The arithmetic is almost absurd on its face: revenue up 372 percent, earnings that blew past every analyst estimate, and a gross margin that touched an all-time high. Yet SanDisk shares took a beating anyway, shedding 6.84 percent in German trading on Thursday to €1,090.00 after closing the prior session at €1,170.00. On the Nasdaq, the stock had already tumbled more than 12 percent in after-hours trading the evening before.

The disconnect is a familiar one in the memory-chip trade: markets don’t pay for what you did, they pay for what you’ll do next.

The Numbers Were Never the Problem

For the fourth quarter of fiscal 2026, which ended July 3, SanDisk delivered revenue of $8.97 billion — a 372 percent jump year over year and a 51 percent sequential gain, comfortably ahead of the consensus estimate of roughly $8.48 billion. Adjusted earnings per share came in at $39.25 versus the $34.96 analysts had penciled in. Adjusted gross margin hit a record 84.6 percent. For the full fiscal year, revenue reached $20.25 billion, up 175 percent, with GAAP net income of $11.43 billion.

The growth engine was unmistakable. Datacenter revenue surged 103 percent quarter over quarter to $2.98 billion, powered by hyperscalers stocking up on AI-ready storage. The edge segment expanded 392 percent to $5.43 billion, while the consumer business slipped to $556 million. SanDisk, which formally separated from Western Digital in February 2025, has clearly found its footing as an independent player.

But the market’s gaze was fixed elsewhere — on the guidance, where the midpoint of $10.55 billion for the first quarter of fiscal 2027 landed below the consensus of roughly $10.8 billion, with some estimates running as high as $11 billion. The company’s EPS outlook of $44 to $46 and gross margin guidance of 83 to 85 percent did little to soften the blow.

A Familiar Pattern for High-Flying Chip Stocks

The sell-off extends a slide that began well before this earnings cycle. The stock now sits 47.09 percent below its 52-week high reached in June — measured in euros, that’s a 43.20 percent gap from the €2,060.00 peak — and trades 27.20 percent below its 50-day moving average. With a market capitalization of roughly €165 billion, the market had clearly priced in a great deal of momentum before the guidance poured cold water on it.

The pattern is well-worn: when a stock has rallied as hard as SanDisk’s has, even a beat of this magnitude isn’t enough if the forward trajectory appears to flatten. The relative strength index of 42.7 suggests the stock isn’t yet oversold, leaving room for further volatility.

Should investors sell immediately? Or is it worth buying SANDISK?

Analysts Split on What Comes Next

Wall Street’s reaction has been anything but uniform. Goldman Sachs reaffirmed its buy rating with a $2,200 price target, arguing that operational strength remains intact and that expectations had simply run too hot. Citi slashed its target from $2,500 to $2,100 but called the sell-off overdone, predicting a recovery within 90 days. Wells Fargo took a more cautious line, trimming its target from $1,620 to $1,400. Barclays, meanwhile, framed the pullback as a buying opportunity, pointing to five new long-term supply agreements with a minimum contract value of $94 billion and visibility into roughly half of the expected bit volume for fiscal 2027.

CEO David Goeckeler defended the numbers by citing demand visibility extending beyond four years, backed by long-term supply contracts now carrying a minimum volume of $93.3 billion. He also flagged an expected mid-teens percentage decline in PC and smartphone shipments for 2026, while anticipating a NAND market recovery from 2027 onward.

Buybacks, Insider Moves, and a Technology Blitz

The board moved to signal confidence, approving an additional $14 billion share repurchase authorization, bringing the total remaining buyback capacity to $15.5 billion.

On the technology front, SanDisk has been busy positioning itself for the AI era. At the Future of Memory and Storage conference on Tuesday, the company and Kioxia unveiled the tenth generation of their BiCS QLC 3D flash technology, BiCS10, featuring 332 layers and a 60 percent improvement in bit density over its predecessor. A day earlier, SanDisk and SK hynix published the first technical specification for High Bandwidth Flash under the Open Compute Project, aimed at standardizing memory tiers for AI inference systems.

One insider transaction bears watching, though it appears routine: Chief Legal Officer Bernard Shek sold 600 shares on June 3 at an average price of $1,736.00, executed under a pre-arranged Rule 10b5-1 trading plan. Susquehanna analyst Mehdi Hosseini had trimmed his price target from $3,250 to $3,050 on July 23 while maintaining a positive rating — a call that predates the current earnings and may warrant revisiting.

The Investor Day Looms

All eyes now turn to August 13, when SanDisk hosts its investor day at 9:00 a.m. Eastern. Management is expected to lay out its long-term strategy and AI storage roadmap. After a week that saw record results punished and a guidance miss amplified, the appetite for clarity on growth prospects will be considerable. The buyback authorization suggests management believes the stock is undervalued at current levels — whether the market comes around to that view may depend on what gets said in that room.