SanDisk Falls Over 6% on Lower-Than-Expected Guidance; Memory Allocation to Extend Beyond 2027

According to Yahoo Finance, SanDisk (SNDK-US) shares plunged 6.8% on Thursday (6th), after the flash memory and storage device maker announced first-quarter fiscal 2027 revenue guidance that fell short of analyst expectations.

SanDisk forecasts first-quarter revenue between $10.3 billion and $10.8 billion, below the analyst consensus of $11.16 billion. While last quarter’s gross margin hit a record high of 84.6%, the company’s full-year 2027 gross margin outlook is projected at 83% to 85%.

Last quarter’s adjusted earnings per share (EPS) came in at $39.25, surpassing the market expectation of $34.37. The company expects adjusted EPS for the current quarter to range between $44 and $46, slightly above the market estimate of $45.58.

SanDisk’s fourth-quarter fiscal 2026 revenue reached $8.79 billion, exceeding Wall Street’s forecast of $8.64 billion. The company said approximately one-third of revenue growth came from increased shipment volume, while two-thirds stemmed from higher pricing.

Management noted that customer demand continues to outpace supply, leading them to expect the memory bit allocation system to persist beyond 2027. In other words, the company will continue allocating memory supply to customers.

Since its April earnings release, management said it has continued advancing its New Business Model (NBM) based on long-term contracts, adding three new customers and expanding two existing partnerships—indicating robust long-term demand. These contracts extend up to five years, with an average duration exceeding four years.

Luis Visoso, SanDisk’s Chief Financial Officer, stated, 'Based on minimum pricing, all signed NBM contracts to date are expected to generate at least $93.9 billion in revenue. We believe actual revenue will exceed this floor.'

For business outside the NBM contracts, product pricing will continue to fluctuate with market conditions.

SanDisk was spun off from Western Digital (WDC-US) in February 2025. As memory and storage devices have become critical bottlenecks in AI infrastructure development, the company has emerged as one of the standout performers in the U.S. stock market this year.

Earlier this week, SanDisk surged after jointly announcing a new hardware technology roadmap with memory manufacturer SK Hynix (SKHY-US). The collaboration aims to establish common standards for high-speed memory, enabling faster and lower-cost AI chip operations. Both companies said the partnership will help reduce data center costs and accelerate the deployment of advanced AI applications.

To date, SanDisk’s stock has soared nearly 490% year-to-date, making it the best-performing component of the S&P 500 Index since early 2026.

On Wall Street, 25 analysts have issued buy ratings, 5 have issued hold ratings, and no analyst has recommended selling. The average target price is slightly above $2,400.