Is Sandisk's Incredible Run About to End?
Until news and sentiment shift again, don't fight the trend.
Sandisk's shares have surged 385% since January, but a recent drop of over 43% has raised concerns. The company's latest earnings report, for its fiscal 2027 first quarter, showed revenue growth of 23% quarter-over-quarter and 378% year-over-year, reaching around $11 billion. Earnings per share stood at $52.60, up 20% quarter-over-quarter, surpassing expectations.
The strong performance in the AI data center sector, leading to a 1,700% year-over-year increase in NAND prices, contributed to this success. However, Sandisk's Edge commercial unit revenue fell short of estimates, growing 320% year-over-year to $5.8 billion. The company's latest guidance suggests slower growth ahead, with revenue expected in the $12.2 billion to $12.6 billion range, a modest 11% to 14.5% increase quarter-over-quarter.
With a low valuation at 5 times forward earnings, Sandisk's cyclical nature in the memory chip business is evident. While an 8-for-1 stock split may bring temporary relief, the current narrative needs to shift for Sandisk to attract investors. Until a more positive outlook emerges, it may be wise to avoid fighting the trend.
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- Is Sandisk's Incredible Run About to End? nasdaq.com
