SanDisk drops 10% as guidance misses on muted memory pricing

SanDisk shares fell more than 10% in premarket trading after the memory-chip maker's fiscal first-quarter revenue guidance missed Wall Street expectations despite a record fourth quarter.

"The September quarter revenue outlook missed estimates on more muted pricing," Citi analyst Asiya Merchant wrote in a note, cutting her price target to $2,100 from $2,500 while keeping a Buy rating. Wells Fargo lowered its target to $1,400 from $1,620 with an Equal Weight rating, saying the stock's recent run-up had grown too optimistic.

SanDisk reported Q4 revenue of $8.97 billion, up 372% from a year earlier and beating the $8.48 billion consensus by 5.7%. Non-GAAP EPS of $39.25 topped the $34.96 estimate by $4.29, while gross margin reached 84.6%. The company guided Q1 revenue to $10.3 billion-$10.8 billion, a midpoint of $10.55 billion below the $10.82 billion analysts expected, and adjusted EPS of $44-$46 versus a $44.72 consensus.

The company approved a $14 billion share repurchase plan, leaving $15.5 billion available under the authorization. SNDK has gained more than 450% this year and over 3,000% in the past 12 months.

Revenue growth was driven by AI infrastructure spending from cloud hyperscalers including Meta, Amazon, Alphabet and Microsoft. Datacenter revenue more than doubled sequentially to $2.98 billion, up 1,298% from a year earlier, while consumer revenue fell 32% to $556 million. Management said smartphones and PCs are in an adjustment period but should return to growth during calendar 2027.

SanDisk also expanded its New Business Model contracts, which lock in multi-year supply, volume and pricing with floors and ceilings. Minimum contracted revenue rose to $93.9 billion across 10 agreements with eight customers, backed by $16.5 billion in financial guarantees, covering roughly half of fiscal 2027 bits and two-thirds of fiscal 2028.

Wells Fargo said SanDisk's average selling prices for its chips did not rise as much as competitors', driving the lower profit-margin guidance for the coming quarter. The firm added that greater visibility into deals with large customers should make future results easier to forecast.

The guidance miss suggests memory pricing may be peaking after a historic upcycle, a risk for the broader semiconductor storage sector including peers Western Digital and Micron. Investors will watch SanDisk's Investor Day on Aug. 13 for updated supply plans and margin outlook.

This article is for informational purposes only and does not constitute investment advice.