Sandisk unveils underwhelming outlook despite AI demand surge; shares slip

Investing.com -- Sandisk forecast first-quarter revenue which underwhelmed Wall Street expectations, sending shares lower in premarket U.S. trading on Thursday.

The flash memory maker, which has been a major beneficiary of the boom in demand for the infrastructure underpinning cutting-edge artificial intelligence systems, expects fiscal first-quarter 2027 revenue of $10.3 billion to $10.8 billion, compared with analysts’ consensus estimate of $10.62 billion. It expects adjusted earnings per share of $44.00 to $46.00, versus the consensus estimate of $44.21.

While Sandisk delivered another quarter of outsized growth and expanded its share buyback program, investors appeared to focus on guidance that did not materially exceed lofty expectations. Shares of Sandisk slumped by more than 9% before the start of U.S. trading. The stock has surged by more than 390% so far this year.

For its fiscal fourth-quarter, Sandisk posted revenue of $8.97 billion, up 51% sequentially and 372% from a year earlier, with growth driven roughly one-third by higher shipment volumes and two-thirds by stronger pricing. GAAP net income surged to $6.90 billion, or $43.97 per diluted share, from a loss of $23 million, or $0.16 per share, a year earlier.

The company said fiscal 2026 revenue climbed 175% year over year to $20.25 billion as it benefited from a shift toward higher-value customers and stronger pricing. Data center revenue rose 437% for the full year, underscoring growing demand for AI infrastructure and enterprise storage.

By business segment, fourth-quarter data center revenue more than doubled sequentially to $2.98 billion, while edge revenue increased 48% to $5.43 billion. Consumer revenue fell 32% sequentially to $556 million.

The company also expanded its capital return program, with its board approving an additional $14 billion share repurchase authorization, increasing the remaining buyback capacity to $15.5 billion. Sandisk said it has signed five additional New Business Model agreements since its April earnings release, bringing the total number of new agreements announced since then to ten.

"Numbers on an absolute basis are spectacular, but the shortfall on guidance is negative," analysts at Vital Knowledge said in a note.

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