#Why Did Sandisk Shares Drop After Strong Earnings?
Sandisk experienced a notable decrease of approximately 7% in after-hours trading on Wednesday, despite the company reporting fiscal fourth-quarter earnings that exceeded expectations. Investors seemed to concentrate more on a revenue forecast that underperformed against high Wall Street predictions. This trend followed a 5.4% slide during regular trading hours, indicating a continuing decline in the stock value after a significant rally fueled by increased demand for storage products, particularly those utilized in artificial intelligence infrastructure. Remarkably, Sandisk shares had surged over 400% by 2026 before these latest earnings were released.
In its fiscal fourth quarter, Sandisk reported revenues of $8.97 billion, marking a sequential increase of 51% and a staggering 372% rise from the corresponding period last year. This figure surpassed the $8.48 billion projected by analysts.
The company's adjusted earnings hit $39.25 per diluted share, exceeding Wall Street’s expectations of $34.96. The GAAP net income reached $6.90 billion, translating to $43.97 per diluted share.
Sandisk noted that about one-third of its sequential revenue growth arose from increased sales volumes, while two-thirds resulted from adjustments in pricing. Furthermore, the gross margin improved to 84.6% from 78.4% in the previous quarter.
#What Is Driving Sandisk's Revenue?
The data center segment of Sandisk's business generated $2.98 billion in revenue, representing a sequential growth of 103% and surpassing analyst estimates of around $2.74 billion. Additionally, edge revenue grew by 48% from the previous quarter, reaching $5.43 billion. In contrast, consumer revenue experienced a decline, dropping 32% to $556 million.
Looking ahead to the fiscal first quarter of 2027, Sandisk anticipates revenues ranging from $10.3 billion to $10.8 billion. The midpoint estimate of $10.55 billion falls short of Wall Street’s predictions of approximately $10.8 billion. The company also projected adjusted earnings between $44 and $46 per share. While the midpoint slightly exceeds the $44.72 expectation set by analysts, it does not sufficiently meet the anticipated growth levels prompted by Sandisk's substantial stock rally.
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#What Strategic Moves Is Sandisk Making?
To bolster investor confidence, Sandisk expanded its share repurchase authorization by $14 billion, increasing its total remaining authority to $15.5 billion. In fiscal 2026, the company had already repurchased about $4.52 billion in stock. Additionally, Sandisk signed five new business model agreements since its earnings report in April, including contracts with three new customers and expansions of two prior deals. In total, Sandisk has entered into ten new business arrangements to ensure consistent customer demand while minimizing exposure to fluctuations in memory pricing.
For the entire fiscal year, Sandisk's revenue surged by 175% to $20.25 billion. GAAP net income also climbed to $11.43 billion. Notably, data center revenue skyrocketed by 437% to $5.15 billion, demonstrating the escalating demand for storage solutions given the current advancements in artificial intelligence infrastructure.