Sandisk experiences a sharp share decline after reporting robust quarterly earnings, amid cautious outlook and industry shifts towards AI and high-bandwidth memory, raising questions about whether the memory cycle is peaking.
Sandisk has fallen sharply from its recent peak even after delivering another quarter of extraordinary growth, a sign that investors are focusing less on the latest numbers than on what comes next. The shares, which had been among the strongest performers in the market over the past year, have retreated steeply since June as Wall Street weighs whether the memory cycle is nearing a turning point.
The company’s latest fiscal fourth-quarter results showed just how strong demand remains for NAND flash memory. Revenue climbed 372% year on year to $9 billion, while gross margin improved to 84.6% from 26.2% a year earlier. Adjusted earnings per share rose to $39.25, well ahead of the company’s earlier outlook. Data centre sales increased to $3 billion from $213 million a year earlier, and the edge business, which includes devices such as smartphones and laptops, jumped to $5.4 billion. Consumer revenue, by contrast, slipped 5% to $556 million.
Even so, the market sold the stock because Sandisk’s fiscal first-quarter revenue forecast narrowly missed analyst expectations. The company guided for revenue of $10.3 billion to $10.8 billion, with a midpoint of $10.55 billion, below the consensus estimate of $10.62 billion. Management said gross margin should remain strong at 83% to 85%, but investors appear to be treating the smaller-than-expected top-line forecast as a warning that the current pricing boom may not last indefinitely.
Sandisk is responding by prioritising durability over maximum short-term revenue. It has added three long-term agreements since its fiscal third-quarter report, bringing the total to eight contracts with data centre and edge customers. According to the company, those deals cover $93.9 billion in revenue at floor pricing and include $16.5 billion in financial guarantees. Management also said it expects production to rise at a mid-to-high-teens pace and believes that, with four years of visibility, supply and demand will eventually come back into balance.
The broader industry backdrop helps explain both Sandisk’s strength and the caution around its outlook. NAND prices have surged because supply has been tight, with major memory makers shifting capacity towards DRAM and high-bandwidth memory for AI chips. Reuters reported in previous coverage that AI data centres are consuming vast quantities of high-performance SSDs for training workloads, while demand in consumer electronics has remained weaker. Sandisk has also been talking up newer opportunities such as agentic AI, KV-cache and high-bandwidth flash developed with SK Hynix, which the company and its partner say could become a larger inference-market technology over time.
For now, the key question for investors is whether the current retreat is a pause in a powerful earnings cycle or the first sign that the cycle is peaking. At about 5.6 times fiscal 2027 estimated earnings, Sandisk is no longer priced for perfection, but it is still being judged against a memory market that has historically moved in abrupt swings.
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