SanDisk's Record Results Can't Escape the Shadow of a Softer NAND Pricing Outlook

SanDisk's record Q4 revenue and 84.6% gross margin fail to impress as Q1 guidance misses lofty analyst targets, triggering a selloff.

There's a peculiar arithmetic at work in SanDisk's latest chapter: the company just delivered the strongest quarterly figures in its history, and investors responded by knocking roughly 30% off the share price over the past month. The Friday close of €1,050.00, down 4.55% on the day, caps a period in which the market has chosen to fixate on what comes next rather than celebrate what just happened.

The headline numbers are undeniably impressive. Fourth-quarter revenue for fiscal 2026 hit $8.97 billion, a 372% surge year-over-year, with GAAP net income of $6.90 billion. The full fiscal year delivered $20.25 billion in revenue, up 175% from the prior year. Perhaps most striking, gross margin reached a record 84.6% — a testament to the pricing power SanDisk currently wields in a market where silicon remains scarce. Data center sales alone jumped 1,298%.

Yet the selloff wasn't about the rearview mirror. Management's first-quarter fiscal 2027 guidance called for revenue between $10.30 billion and $10.80 billion, with adjusted earnings per share of $44.00 to $46.00. While that represents meaningful sequential growth, it fell short of the most ambitious analyst projections, which had reached as high as $11.16 billion. In a market conditioned to reward perfection in AI-related trades, even a modest gap between guidance and the most optimistic forecasts proved enough to trigger a sharp retreat.

The deeper concern centers on NAND flash pricing momentum. After a year of dramatic price increases that propelled the stock, the company now signals only moderate average selling price gains for the September quarter. That deceleration has prompted a wave of price target cuts across Wall Street, though the direction of those revisions tells a more nuanced story.

Jefferies' Blayne Curtis slashed his target from $3,000 to $1,750 — a $1,250 reduction — while maintaining a buy rating, citing the cooling NAND pricing dynamics. Wells Fargo's Aaron Rakers went further, downgrading the stock from Overweight to Neutral and trimming his target from $1,600 to $1,420. Evercore ISI cut its target from $3,100 to $2,800 but noted that projected gross margins of 83% to 85% for the September quarter exceed consensus estimates. Mizuho and Citi also trimmed their targets to $1,900 and $2,100 respectively, without abandoning their positive stances. Morgan Stanley held firm at $1,750, pointing to resilient NAND demand despite the cautious near-term outlook. Wedbush kept its $2,000 target, arguing SanDisk may once again be playing it conservative with pricing guidance, with supply constraints and long-term contracts potentially supporting prices and profitability for years to come. RBC Capital's Srini Pajjuri was the outlier, actually raising his target — though at $1,300, it remains the lowest among major firms.

The consensus price target now sits at €1,918.66, implying roughly 82.7% upside from Friday's close. The stock trades 49% below its June peak, with annualized volatility exceeding 150% — a reminder that this remains a high-risk bet on the durability of the AI infrastructure boom.

What the market's fixation on near-term guidance may be overlooking is the scale of SanDisk's contracted future. Management has now secured eight large, non-binding framework agreements with key customers, guaranteeing a minimum of $93.9 billion in revenue through mid-2027. These agreements already cover half of next year's production capacity, rising to two-thirds the following year. The CEO has acknowledged the company will have essentially "no capacity" left by 2027 — a structural signal for the entire NAND flash industry, where high-performance enterprise SSDs have become a bottleneck for AI deployment. Industry observers note enterprise storage prices jumped roughly 80% in early 2026.

Alongside the earnings release, the board announced an additional $14 billion buyback program, bringing total remaining repurchase authorization to $15.5 billion. The company also disclosed five more agreements under its "New Business Model" — three with new customers and two expansions of existing contracts — on top of the five announced during the April call.

On the technology front, SanDisk and SK hynix jointly published the technical specification for "High Bandwidth Flash" (HBF) through the Open Compute Project, a memory technology aimed at AI inference workloads. The standardization effort, launched just six months ago, has already drawn participation from Google and Tenstorrent. Management will elaborate further at the company's investor day on August 13, where CEO David Goeckeler and CFO Luis Visoso are scheduled to address the business outlook.

Institutional positioning remains mixed. Dimensional Fund Advisors built a new position worth roughly $100 million, while Delta Global Management significantly reduced its stake during the second quarter.

The fundamental challenge for SanDisk may be less about finances and more about operations: proving it can transition from a celebrated growth story into a reliable industrial supplier capable of managing production in a NAND market that some analysts see approaching $500 billion by 2027. Until the company can break through its own capacity ceiling, the stock may remain tethered below its June high — even as the order book suggests a far more secure future than the recent price action implies.