Up nearly 470% this year, and more than 3,100% over the last year, Sandisk (NASDAQ: SNDK) is down big following its latest earnings report. Even though the memory chip maker reported better-than-expected financial results for its latest quarter, investors were disappointed by the company’s outlook for the months ahead.
The company reported adjusted earnings of $39.25 per share for its fiscal fourth quarter, well above Wall Street’s expectations of $34.96 per share. Revenue also came in stronger than expected at $8.97 billion, beating analysts’ forecasts of $8.48 billion.
Unfortunately, investors weren’t too happy with guidance.
The company said it expects adjusted earnings to be between $44 and $46 per share, with the midpoint above the $44.72 per share estimate. Revenue is forecast to be between $10.3 billion and $10.8 billion, with the midpoint of $10.55 billion below the $10.82. billion estimates.
Investors May Find Value in the Recent Market Weakness
In fact, according to Barclays’ analysts, “June revenue came in above, with better pricing offsetting weaker-than-expected bit growth. Guidance came in below, which we suspect to again be from bit growth. The company is rationalizing lower bit growth by building up more inventory in order to meet the contractual obligations for the NBMs and still expects FY27 bit growth in the mid?-?teens.
The company signed 5 new NBM deals at $94B minimum revenue and $91B RPO. These deals lock up 50% of FY27 bits and ~2/3 of FY28 bits. The company also expects to continue major buybacks with excess cash after doing $4.5 billion in June. Overall, the story here remains the same, and we think Sandisk is attractive on a pullback,” as quoted by Yahoo.
We also have to consider that the rapid rise of AI is forcing companies to demand massive amounts of computing power. Companies, including Amazon, Meta Platforms, and Alphabet, are spending hundreds of billions of dollars building new data centers to support AI applications. These facilities require enormous quantities of advanced hardware, creating strong demand for memory products.
Because demand has been much higher than available supply, memory manufacturers like Sandisk have been able to increase prices. Higher pricing, combined with strong customer demand, has significantly boosted the company’s sales and profits over the past year.
All of which is a strong catalyst for the SNDK stock.
Data Center Business Delivers Strong Results
Sandisk’s data center business was one of the company’s strongest performers during the quarter. Revenue from the data center segment reached $2.98 billion, comfortably beating analysts’ expectations of $2.74 billion. The result shows that cloud computing companies continue to invest heavily in expanding their infrastructure as AI workloads become larger and more demanding.
In addition, in the company’s earnings release, CEO David Goeckeler said Sandisk finished fiscal 2026 in a strong position. He said the company now has a leading technology portfolio, has established its data center business as a major growth engine, and has strengthened relationships with customers.
NAND Supply Can’t Keep up with Demand
We also have to consider that artificial intelligence will continue to create massive demand for data centers, which will lead to further demand for NAND. After all, NAND is a vital part of the AI infrastructure for massive amounts of data storage, speed and performance. We also have to consider that demand for more data centers (which will need more NAND) are exploding.
Consider this. According to MIT Technology Review, there are about 3,000 data centers across the U.S. Plus, according to a report from McKinsey, $5.2 trillion in AI infrastructure investments will be needed by 2030. Again, growing demand for data centers will mean growing demand for more NAND memory in an already tight market.
Given the requirements of AI data centers, demand for NAND will only rise, fueling even more upside for stocks, such as Sandisk.
