Why the Sandisk earnings sell-off looks absurd

In the unreserved to the exits connected Sandisk (SNDK) aft a flimsy existent 4th guidance miss connected Wednesday night, investors whitethorn beryllium overlooking a blunt reality.

This institution is executing good arsenic it partakes successful the AI roar driving request for its representation chips.

+175%

This is however overmuch Sandisk's income roseate successful its just-completed fiscal year, Yahoo Finance AlphaSpace information shows. Looked astatine different way, the backdrop is truthful beardown for representation chips that Sandisk closed retired its fiscal twelvemonth with $20.2 cardinal successful sales, up from $7.4 cardinal a twelvemonth ago.

What's more, Sandisk saw an acceleration successful its income maturation successful its fiscal 4th fourth to a 372% year-over-year rate.

Zoom retired

Sandisk reported blowout fiscal 4th fourth 2026 results, comfortably beating Wall Street estimates with non-GAAP net of $39.25 per stock connected $8.97 cardinal successful revenue.

The grounds top-line show was driven by explosive request for AI representation infrastructure, which propelled information halfway gross up 103% sequentially to $2.98 billion.

But the banal tanked 10% aboriginal Thursday, chiefly due to the fact that the midpoint of Sandisk's archetypal 4th fiscal 2027 gross guidance ($10.3 cardinal to $10.8 billion) came successful beneath statement estimates of $10.8 billion.

Keep successful caput that contempt a summertime swoon, Sandisk shares are inactive up adjacent to 500% this year. So the guidance past nighttime needed to beryllium perfectly mind-bending to support the bears from piling on. It wasn't.

Executives gave nary denotation connected the net telephone that Sandisk's cardinal communicative was shifting negatively, however.

"We spent a batch of clip implicit the past 2 oregon 3 quarters truly moving precise profoundly with our largest customers connected committing demand. We person implicit 4 years of visibility now. We consciousness precise bully astir wherever the franchise is," Sandisk CEO David Goeckeler said.

Wall Street Chatter

Barclays expert Tom O'Malley:

"June gross came successful supra with amended pricing offsetting weaker than expected spot growth. Guide came successful beneath which we fishy to again beryllium from spot growth. The institution is rationalizing little spot maturation by gathering up much inventory successful bid to conscionable the contractual obligations for the NBMs and inactive expects FY27 spot maturation successful the mid​-​teens. The institution signed 5 caller NBM deals astatine $94B minimum gross and $91B RPO. These deals lock-up 50% of FY27 bits and ~2/3 of FY28 bits. The institution besides expects to proceed large buybacks with excess currency aft doing $4.5 cardinal successful June. Overall, the communicative present remains the aforesaid and we deliberation Sandisk is charismatic connected a pullback."