SanDisk Shares Plunge After Strong Earnings as Investors Question How Long the Memory Boom Lasts
Shares of SanDisk plunged Friday, extending a slide that began the day before even as the memory chip maker reported quarterly revenue up 378 percent from a year earlier.
The stock fell 5.32 percent on Thursday to $1,330.05, slipped another 3.8 percent in after-hours trading to $1,279.50, StockAnalysis data showed, and dropped about 13 percent in early-afternoon trading on Friday, Finnhub market data showed.
SanDisk is one of the five largest suppliers of NAND flash memory in the world. NAND chips store data even when the power is off, and they sit inside USB drives, smartphones and solid-state drives. The company became independent in 2025 after nine years as part of Western Digital.
Demand from artificial intelligence data centers has driven the boom. Those centers buy enterprise solid-state drives, storage devices built from NAND chips for servers, in large numbers, and the surge in orders has pushed NAND prices sharply higher.
For its fiscal first quarter, which ended October 2, SanDisk reported revenue of $11.03 billion, up from $2.31 billion a year earlier and above forecasts of about $10.7 billion. Adjusted earnings, profit per share excluding one-time items, reached $49.51, above expectations of about $46.67, and the non-GAAP gross margin, the share of sales left after direct production costs, widened to 85.1 percent from 29.9 percent a year earlier.
Data center revenue surged 61 percent from the prior quarter to $4.8 billion, rising to 43.5 percent of total revenue from 11.7 percent a year earlier. Consumer revenue moved the other way, falling 39 percent from a year earlier to $397 million.
The company also raised its guidance, its own forecast for the coming quarter, calling for fiscal second-quarter revenue of $12.2 billion to $12.6 billion and adjusted earnings of $55 to $57 a share. Both were above Wall Street expectations, but the sales midpoint of $12.4 billion was only about 0.7 percent above the consensus of $12.31 billion, Briefing.com noted. Management also sounded cautious about the fiscal third quarter, citing normal seasonal weakness without giving formal guidance, and said price increases in the current quarter would be modest.
The muted reaction reflects how far the stock had already run. Shares were up about 385 percent this year before Friday, Finnhub data showed, after trading as low as $164.56 in the past 52 weeks. Bank of America kept a Buy rating but cut its price target to $2,000 from $2,500, citing concern that the memory cycle, the boom-and-bust pattern of chip prices, is reaching a late stage. Wells Fargo said the shares needed time to digest a slowing pace of earnings gains. After such a run, selling to lock in gains is also common.
Friday’s fall also came in a broad selloff in chip stocks after disappointing reports from Amazon and Intel renewed doubts about technology spending. Micron Technology fell about 5 percent, SK Hynix fell more than 7 percent and Western Digital and Seagate Technology each fell about 6 percent.
SanDisk also announced an eight-for-one stock split, which turns each share into eight and cuts the price to one-eighth without changing the value of the company, with split-adjusted trading to begin November 20. The company repurchased about $5 billion of its own shares during the quarter, a move that reduces the share count and lifts earnings per share. The earnings figures in this article are before the split. Neither announcement stopped the slide.
The result is a stock falling not on a missed quarter but on a question the quarter could not answer. With margins near 85 percent, further gains depend more on selling more chips than on charging more for them, Briefing.com noted. Goldman Sachs and Bank of America remained positive on storage demand from artificial intelligence, Stocktwits reported. Investors will now watch whether memory prices hold as the year ends.