SanDisk's Blockbuster Quarter Runs Into Wall Street's Patience Test

A 378% revenue surge, an eight-for-one split around the corner, and a stock that still fell. The gap between what SanDisk just delivered and what investors are willing to pay for it is the real story.

SanDisk's fiscal first quarter of 2027 was, on paper, the kind of report most chipmakers can only dream about. Revenue came in at $11.031 billion, up 377.9% year over year. Adjusted earnings reached $49.51 per share. Demand from data centers did the heavy lifting: that segment generated $4.802 billion, a 61.3% jump from the prior quarter, and accounted for 43.5% of total sales.

Yet shares slid on Friday. The reason isn't a demand problem — it's a durability question. Investors are no longer simply pricing in AI memory demand; they're asking how long it lasts.

Where the Cracks Show

Chief Financial Officer Luis Visoso pointed to softness at the other end of the business. Flash sales volume in the lower market segment contracted 20% year over year, and Edge revenue grew just 7% sequentially. Different comparison periods make it impossible to read price trends directly from those figures, but the message lands all the same: demand isn't moving in lockstep across SanDisk's portfolio. Anyone who frames the company purely as an AI buildout play is missing the weakness outside the data-center boom.

The guidance, at least, points away from an immediate slowdown. For the fiscal second quarter of 2027, SanDisk guided to revenue of $12.4 billion at the midpoint and adjusted earnings per share of $55 to $57 — before the announced stock split takes effect. That's a formidable operating outlook. It doesn't, however, settle the question the market is actually asking: how much of this is sustainable, and how much reflects a particularly favorable stretch for demand and pricing?

Analysts Trim Targets, Keep Their Ratings

Morgan Stanley reaffirmed its "Overweight" rating on Friday. Analyst Joseph Moore models roughly $271 in earnings per share for fiscal 2027, against a through-cycle figure of $62.50. Those two yardsticks explain why a valuation built on near-term forecasts offers little comfort on its own: the same share price looks cheap if you extrapolate extraordinary profits, and considerably richer if you anchor to a lower through-cycle number. The assumption about how long the boom runs does most of the work.

RBC Capital, for its part, kept its "Sector Perform" rating. Evercore ISI reportedly cut its price target to $2,500 from $2,800 on Friday while maintaining an "Outperform" rating. Two other research houses also trimmed targets that day — to $1,900 and $2,720 — and both retained their positive ratings. The pattern across the Street is consistent: lower price targets, unchanged recommendations.

Contracts, a New Platform, and a Split

Underpinning the bull case is a contracted backlog. Eight agreements with data-center and Edge customers carry a weighted average term of more than four years and are set to cover over 50% of fiscal 2027 bit volumes, with roughly two-thirds of fiscal 2028 volumes already covered. SanDisk also said its QLC Stargate platform is already shipping and generating revenue, with customers ramping the product.

Then there's the mechanical piece. The board approved an eight-for-one stock split, with shares to be distributed after the close on November 19 and split-adjusted trading expected from November 20. That adjustment changes the share count and the per-share price — not the value of anyone's stake.

Morgan Stanley expects NAND shortages and rising prices to persist into next year, which supports the optimistic read. The warning about weaker segments doesn't disappear because of it. For now, SanDisk is less a referendum on AI memory demand than a test of whether volume growth and durable orders can carry profits once the tailwind from higher memory prices fades.