Semiconductor stocks faced renewed selling pressure in pre-market trading on Thursday after SanDisk's quarterly outlook failed to meet the market's elevated expectations, triggering a broad retreat across AI and memory-chip names. Nvidia, Micron, and AMD all slipped as investors locked in gains following a period of strong performance.
At 5:30 a.m. ET, Nvidia was slightly lower, while Micron had fallen 3.3% and AMD was down 1.9%. SanDisk itself tumbled more than 9%. Nasdaq 100 futures declined 0.4%, reflecting a broader reassessment of valuations in the crowded semiconductor trade.
SanDisk's Beat Overshadowed by Guidance
SanDisk reported fiscal fourth-quarter revenue of $8.97 billion, beating the FactSet consensus of $8.48 billion. Adjusted earnings came in at $39.25 per share, well above the expected $34.96. Data-center revenue rose to $2.98 billion. However, the company's September-quarter revenue guidance of $10.3 billion to $10.8 billion fell short of Wall Street's estimate of approximately $10.8 billion. The midpoint of $10.55 billion and adjusted earnings guidance of $44 to $46 per share offered little upside, disappointing investors who had hoped for another dramatic upward revision.
Analysts noted that the market's reaction reflects sentiment rather than the absolute strength of the results. Wedbush's Matt Bryson remains constructive, expecting earnings momentum to continue through fiscal 2027 and 2028 due to limited industry capacity additions and multiyear customer agreements.
Micron Bears the Brunt of Memory Read-Through
Micron was the most direct casualty, given its overlapping exposure to the memory cycle. SanDisk focuses on NAND flash, while Micron also sells DRAM and high-bandwidth memory. Both have benefited from constrained supply and AI-driven data-center investment. The selloff was amplified by sharp declines in Asian semiconductor stocks, led by Samsung Electronics and SK Hynix, suggesting investors were cutting positions across the memory trade rather than reacting solely to SanDisk.
Morgan Stanley's Joseph Moore wrote that there is "no quick fix to the memory shortage," with constraints potentially persisting for two to three years or longer. Micron's record June quarter and long-term customer commitments underscore the ongoing demand-supply imbalance.
Nvidia and AMD Face Different Pressures
Nvidia's modest decline appeared to reflect sector-wide de-risking and profit-taking. The stock had gained 3.4% on Wednesday after Elon Musk said SpaceX would rely exclusively on Nvidia chips, giving traders an opportunity to lock in gains. AMD, meanwhile, entered Thursday in a weaker position after falling 7% on Wednesday despite record revenue and an above-consensus outlook. The market focused on its flat 56% third-quarter gross-margin forecast, which disappointed investors.
Aptus Capital Advisors' David Wagner called AMD's reaction a classic "sell the news" event, while William Blair's Sebastien Naji said AMD still had "much to prove" as its Helios ramp progresses.
Next Test: SanDisk's Investor Day
SanDisk's August 13 investor day will be the next key catalyst for the sector. Management must demonstrate that customer contracts and AI-storage demand can support earnings beyond the current shortage. As the market digests these developments, investors are closely watching whether the memory upcycle has further room to run or if valuations have outpaced fundamentals.
This article is for informational purposes only and does not constitute financial advice.
