SanDisk's $14 Billion Buyback Signals Confidence, But Wall Street Wants Slower Growth

SanDisk's stellar Q4 results and $93.9B contract backlog couldn't offset fears of slowing NAND price hikes, sending shares down 49% from highs.

The arithmetic of SanDisk's latest earnings report is almost absurdly good. Revenue for the fiscal fourth quarter hit $8.97 billion, up 51 percent sequentially, with GAAP earnings per share of $43.97 and adjusted EPS of $39.25 that sailed past analyst estimates. For the full fiscal year 2026, revenue grew 175 percent to $20.25 billion, and net income reached $11.43 billion. The data center segment alone expanded 437 percent, and adjusted gross margin ballooned to 84.6 percent from 26.2 percent a year earlier.

Yet the stock closed Friday at €1,050.00, down 4.55 percent on the day. Over the past month, the shares have shed 37.50 percent, and they now sit roughly 49 percent below the 52-week high set in June.

The disconnect isn't about the quarter itself. It's about what comes next.

Guidance Raises Questions About Pricing Power

SanDisk's outlook for the first fiscal quarter of 2027 calls for revenue between $10.30 billion and $10.80 billion, with adjusted EPS of $44.00 to $46.00. That's operationally strong by any historical measure, but the company only promised moderate price increases for the September quarter — a notable deceleration from the torrid NAND pricing rally of the past year. Market expectations had clustered around $10.62 billion to $10.8 billion in revenue, so for investors who had grown accustomed to blowout beats, the projection felt like a letdown.

The cautious pricing language triggered a wave of target price revisions across Wall Street, though the direction of those moves was far from uniform. Jefferies' Blayne Curtis slashed his target from $3,000 to $1,750 while maintaining a Buy rating, pointing to softening NAND price momentum as the central concern. Morgan Stanley kept its Overweight rating and $1,750 target, arguing that NAND demand remains robust even if management's tone is cautious. Evercore ISI trimmed from $3,100 to $2,800, Mizuho from $2,200 to $1,900, Citi from $2,500 to $2,100, and Wells Fargo from $1,620 to $1,400. RBC Capital swam against the current, lifting its target from $1,000 to $1,300, while Wedbush held firm at Outperform with a $2,000 target. The average analyst target across the Street sits at $2,220, with a clear majority of Buy ratings.

The Structural Bet: Contracts to Break the Cycle

Behind the quarterly noise is a longer-term strategy aimed at rewriting the memory industry's boom-bust script. SanDisk has now signed eight long-term supply agreements under its New Business Model, securing a minimum of $93.9 billion in revenue backed by $16.5 billion in customer prepayments. Barclays notes that five new NBM agreements were added, bringing the open order book to $91 billion — enough to cover half of planned bit production for fiscal 2027 and two-thirds for 2028.

The board's decision to authorize an additional $14 billion buyback, bringing total remaining repurchase capacity to $15.5 billion, reinforces the message that management sees the stock as undervalued. That confidence stands in contrast to insider activity: media reports indicate company insiders sold $10.9 million worth of shares over the past three months, with no purchases recorded.

On the technology front, SanDisk is pushing its QLC 3D-NAND generation forward and, together with SK hynix, published the first technical specification for an open High-Bandwidth Flash standard through the Open Compute Project, with Google and Tenstorrent also participating. The initiative aims to position HBF alongside traditional HBM in AI accelerators and was a focal point at the FMS storage industry conference in Santa Clara in early August.

What's Priced In, What's Not

The revenue mix tells a story of strategic transformation. Data center sales roughly doubled sequentially to nearly $3 billion, now representing 38 percent of total revenue. The edge segment grew 392 percent to $5.4 billion, while the legacy consumer business slipped slightly to $556 million.

CEO David Goeckeler remains cautiously optimistic about end markets, projecting mid-double-digit percentage declines in PC and smartphone shipments for 2026 but expecting stabilization from 2027 onward, with rising storage capacity per device. The company's fiscal Q4 ended July 3.

The immediate test comes Thursday, when SanDisk hosts its investor day in New York. Goeckeler and CFO Luis Visoso are expected to lay out longer-term capacity plans and growth trajectories. JR Research, an influential independent analyst, recently upgraded the stock to Buy, framing SanDisk as a play on AI infrastructure with a potential addressable market of $500 billion by 2027.

The tension is straightforward: record results, a fortified backlog, and an aggressive buyback argue against a broken business model. But the softer pricing guidance and the breadth of target cuts suggest the market is no longer willing to pay for last quarter's growth rate. Whether the current pullback is a pause or the start of a longer re-rating likely hinges on what management reveals at the investor day — and whether the numbers can finally catch up to the expectations that the stock's earlier run created.