Why Sandisk Stock Plunged Today
Investors got all they wanted and more. It still wasn't enough.
Shares of semiconductor specialist Sandisk (SNDK) were trading significantly lower on Friday, plummeting as much as 11%. By 10:49 a.m. ET, the stock had fallen 9.6%. Despite the stock's sharp decline, the company's financial results were better than analysts had anticipated. For the fiscal 2027 first quarter, which ended on October 2, Sandisk's revenue surged 378% year-over-year and 23% quarter-over-quarter to $11 billion.
This led to adjusted earnings per share (EPS) of $49.51, an increase of more than 40-fold. Even though the stock price had fallen, the company had easily surpassed expectations with substantial room to spare. The driving force behind these impressive results was the soaring demand for memory chips crucial for artificial intelligence (AI) processing.
Data center revenue of $4.8 billion skyrocketed 1,682% year-over-year, surpassing estimates of $4 billion. Simultaneously, edge computing revenue of $5.8 billion jumped 320% year-over-year and 7% sequentially. Sandisk had also raised its second-quarter outlook above Wall Street's expectations, projecting revenue of $12.4 billion and adjusted gross margin of 85%, both at the midpoint of its guidance.
Furthermore, the company announced a long-awaited 8-for-1 stock split to make its shares more accessible to investors and employees. Shareholders of record as of market close on November 9, 2026, will receive seven additional shares for each share they owned, with the split shares set to be issued after market close on November 19, 2026.
Post-split trading is expected to commence when the market opens on November 20, 2026. Despite Sandisk's stellar performance, investors remain skeptical, fearing that the company's growth cannot be sustained indefinitely. Concerns about the continuing demand for AI technologies, the resilience of consumer spending, and a ceiling on memory prices are all weighing on the stock.
Despite these concerns, if one believes that artificial intelligence adoption is still in the early stages, Sandisk stock appears to be a bargain at 16 times earnings.
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