SanDisk (NASDAQ:SNDK) saw its stock extend losses in after-hours trading on Thursday, even after the memory chip maker reported a 378% year-over-year revenue surge and stronger-than-expected profits. The shares slipped another 3.8% in late trading after closing the regular session down 5.3% at $1,330.05.
Fiscal first-quarter revenue reached $11.03 billion, while adjusted earnings came in at $49.51 per share, both ahead of analyst forecasts. The company's non-GAAP gross margin widened to 85.1% from 29.9% a year earlier, reflecting robust pricing power in the NAND flash memory market.
Data-Center Strength vs. Consumer Weakness
The growth was driven largely by data-center sales, which surged 61% sequentially to $4.80 billion, compared with just $269 million in the year-ago quarter. Cloud operators are aggressively buying high-performance storage to support artificial intelligence workloads, and constrained supply has strengthened manufacturers' negotiating leverage.
However, consumer revenue fell 39% year-over-year to $397 million and declined 29% from the prior quarter. Edge revenue increased 7% sequentially to $5.83 billion but still disappointed some analysts. This divergence highlights how dependent SanDisk's earnings have become on exceptional pricing and demand from a single customer segment.
Investors Question Sustainability of Memory Boom
Despite the record results, investors remain skeptical about how long the elevated memory prices can persist. Memory is a cyclical industry, and past booms have often been followed by oversupply and sharp downturns. The stock had already rallied more than 450% this year, so another earnings beat may not be enough without convincing evidence that growth can continue.
“The market is telling you that expectations are changing for how long the earnings boom is going to last for these companies,” Joe Tigay, portfolio manager at Equity Armor Investments, told Bloomberg in comments published before the report.
Guidance and Stock Split Fail to Reassure
SanDisk forecast fiscal second-quarter revenue of $12.2 billion to $12.6 billion, implying further sequential growth. It expects adjusted earnings of $55 to $57 per share, above market projections, and non-GAAP gross margins between 84.5% and 85.5%.
The company also repurchased about $5 billion of shares in the first quarter and announced an eight-for-one stock split. Shareholders will receive additional shares on November 19, with split-adjusted trading starting November 20. While a split makes individual shares more affordable, it does not change the company's overall market value.
Canaccord remains optimistic, noting that AI demand is absorbing capacity and that SanDisk shares trade at roughly six times annualized earnings, according to TipRanks. Mizuho analyst Vijay Rakesh maintained an Outperform rating and a $2,050 price target, saying NAND prices should “remain solid through 2027E” due to limited capacity growth outside China.
However, the valuation could be misleading if today's record margins are near a peak. A decline in earnings would make the stock more expensive than the headline multiple suggests. Investors will also watch whether consumer demand starts recovering in the coming quarters.
This article is for informational purposes only and does not constitute financial advice.
