Quick Read
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Sandisk sank 9% despite beating Q1 estimates and raising Q2 guidance, as its 460% year-to-date rally set an impossibly high bar.
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Western Digital fell 8%, Seagate dropped 7%, and Micron slid 6% as profit-taking swept global memory stocks from Seoul to New York.
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A beat-and-raise quarter, a massive buyback and a stock split couldn't protect one of this year's biggest memory winners from a sharp selloff. Shares of Sandisk( NASDAQ:SNDK ) are at $1,212.85, down 9% in morning trading ahead of the opening bell. The VanEck Semiconductor ETF( NASDAQ:SMH ), a concentrated chip fund, is at $532.40, down 5%. By contrast, the SPDR S&P 500 ETF Trust( NYSEARCA:SPY ) is at $761.31, down 1%.
Sandisk's drop comes after a decline in the October 29 regular session before the report. Even so, Sandisk stock was up 460% year to date (YTD) through the prior session's close, which set a very high bar for any earnings report.
Sandisk Topped Estimates and Lifted Its Q2 Outlook
When the market closed on October 29, Sandisk reported Q1 FY2027 revenue of $11.03 billion, exceeding the $10.7 billion Wall Street analysts expected. Adjusted EPS of $49.51, before the split, beat the $47.15 Wall Street analysts had estimated.
Looking ahead, Sandisk guided Q2 FY2027 adjusted EPS to $55 to $57, above the $54.69 Wall Street analysts forecast. Sandisk's revenue guidance of $12.2 billion to $12.6 billion has an upper end above the $12.29 billion Wall Street analysts expect.
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Data center demand powered the quarter, with Sandisk's data center revenue rising 61% sequentially to $4.8 billion on AI storage spending. At the edge, the company's revenue rose 7% to $5.83 billion, while consumer revenue fell 29% to $397 million. Profitability stayed exceptional, with an adjusted gross margin of 85.1%. CEO David Goeckeler cited "robust and growing demand for our products driving outpaced growth in our data center business."
How Sandisk's Split and Buyback Affect Shareholders
Sandisk bought back approximately 3.2 million shares for $5 billion during the quarter and generated $5.7 billion in adjusted free cash flow.
With the eight-for-one split, shareholders of record on November 9 receive seven additional shares for each share they own, and split-adjusted trading is expected to begin November 20. For retirement savers, a split doesn't change Sandisk's value or anyone's ownership stake.
Western Digital, Seagate and Micron Slide Alongside Sandisk
Western Digital( NASDAQ:WDC ) stock is at $365, down 8%. That decline reduces a rally that still leaves Western Digital up 112% YTD, a far smaller gain than Sandisk's.
Seagate Technology( NASDAQ:STX ) stock is at $648.13, down 7%. Still up 136% YTD, Seagate fell on October 28 after a record quarter, an early sign that strong results weren't enough for this group.
Micron Technology( NASDAQ:MU ) stock is at $874, down 6%, the mildest drop of the group. Sitting on a 206% YTD gain, Micron slid on October 29 as Samsung Electronics' results showed how high expectations are for memory stocks. The VanEck fund holds Micron but none of the drive makers, which helps explain its narrower decline.
Selling also reached Seoul, where Samsung Electronics fell 6% and the Kospi dropped 5%. Those losses point to profit taking across memory stocks worldwide, with Sandisk caught in the same current.
Flash, Hard Drives and DRAM Put Sandisk in a Different Lane
As a pure NAND flash maker, Sandisk produces wafers through a joint venture with Kioxia and sells much of its output under long-term customer agreements backed by prepayments.
Western Digital and Seagate build mass-capacity hard drives for cloud customers, a storage medium that complements flash. Micron makes dynamic random-access memory (DRAM) and NAND, with high-bandwidth memory (HBM) for AI processors as its main growth engine.
Sandisk's Pricing Power Faces Its Next Test
Lip-Bu Tan, CEO of a major PC chipmaker, said on October 29 that soaring memory prices will remain a severe industry-wide challenge into 2027. That cuts both ways for Sandisk: tight supply supports its pricing, but the chipmaker says high prices are hurting PC demand. Broader sentiment is shaky too, as the NASDAQ Composite closed more than 1% lower on October 29 amid growing skepticism toward the AI trade.
The bulls can point to Sandisk management's view that demand is strengthening, with most of next year's bits already committed under long-term agreements. Bears counter that Sandisk expects a seasonally weak Q3 FY2027 and that consumer sales are softening under higher prices.
Sandisk's next test is whether data center demand keeps its pricing firm through the split-adjusted entry. One more signal to watch for is steadier trading in Western Digital, Seagate and Micron. Some investors might prefer a cautious approach until the memory selloff resolves.
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