Sandisk (SNDK) experienced a sharp post-market decline of roughly 6% on Thursday, with shares sliding to around $1,030 after closing the regular session at $1,096.51. The selloff came despite the flash-memory company delivering a stellar fiscal third-quarter earnings report that included a massive revenue surge and a new $6 billion share buyback program.
The company reported fiscal Q3 revenue of $5.95 billion, representing a staggering 251% increase compared to the same period last year. GAAP net income reached $3.62 billion, or $23.03 per share, while adjusted earnings came in at $23.41 per share, significantly exceeding the FactSet consensus estimate of $14.62. Gross margin expanded dramatically to 78.4%, up from just 22.5% a year ago, driven by stronger pricing and a shift toward higher-value customers.
Sandisk's data-center revenue soared 645% year-over-year to $1.47 billion, while edge revenue—storage deployed closer to end users—jumped 295% to $3.66 billion. Consumer revenue also grew 44% year-over-year, though it slipped 10% sequentially. Chief Executive David Goeckeler described the quarter as a “fundamental inflection point,” noting the company’s pivot to what he called “the highest-value end markets.”
Looking ahead, Sandisk forecast fiscal Q4 revenue in the range of $7.75 billion to $8.25 billion, with non-GAAP diluted earnings projected at $30 to $33 per share. The company is targeting a non-GAAP gross margin of 79% to 81%, a level more commonly associated with software companies than memory hardware manufacturers. The company also announced that its board has authorized a $6 billion stock buyback plan, to be funded from operating cash flow.
The stock’s decline highlights the immense pressure on Sandisk following its extraordinary run—shares have surged over 3,000% in the past year, fueled by investor enthusiasm for AI-related memory and storage plays. That kind of rally leaves little room for even a strong “beat and raise” performance. Wall Street analysts remain largely bullish, with Morgan Stanley’s Joseph Moore recently raising his price target to $1,100 from $690, maintaining an overweight rating and emphasizing the durability of the AI-driven demand cycle.
Sandisk’s balance sheet remains robust, with $3.74 billion in cash and zero long-term debt at quarter-end, down from $1.83 billion in debt just three months earlier. Free cash flow reached $2.99 billion, providing ample financial flexibility. The company also reported signing three new multi-year customer agreements under its New Business Model, with two more added in the fiscal fourth quarter.
The broader storage sector is feeling the squeeze of high expectations. Western Digital issued a quarterly revenue outlook above analyst forecasts, citing AI demand supporting prices, while Seagate earlier in the week delivered a bullish outlook that lifted shares of Sandisk, Micron, and other storage stocks. However, the risks remain: Sandisk’s own filings flag potential headwinds from choppy demand, pricing volatility, intense competition, supply-chain disruptions, and dependence on major customers. If AI infrastructure spending slows or new supply comes online faster than expected, the high margins investors currently enjoy could come under significant pressure.
Sandisk spun off from Western Digital as a standalone public company on February 21, 2025, giving investors a pure-play flash-memory company at a time when AI demand was beginning to tighten supply. Thursday’s after-hours selloff underscores a critical shift: the market is no longer just rewarding strong demand—it is now questioning whether that demand can remain robust enough to justify the stock’s meteoric rise.
