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Sandisk Drops 23% From 52-Week High: Buy, Sell or Hold the Stock?
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Key Takeaways
Sandisk shares are down 22.8% from their 52-week high as investors assess pricing and margin durability.
Sandisk expects Q1 fiscal 2027 revenues of $10.3B-$10.8B, supported by higher shipments and pricing.
Sandisk's NBM agreements are expected to cover over half of fiscal 2027 bits, improving revenue visibility.
Sandisk (SNDK - Free Report) shares closed at $1816.57 on Wednesday (Sept. 23), dropping 22.8% from the 52-week high of $2354.39 hit on June 22. Investors have been assessing how sustainable Sandisk’s unusually strong pricing, margins and AI-driven growth is.
In the fourth quarter of fiscal 2026, revenues surged 51% sequentially to $8.97 billion, with roughly two-thirds of the sequential increase coming from higher pricing rather than volume. Non-GAAP gross margin reached 84.6%, up sharply from 26.4% a year earlier. SNDK now expects roughly 80% gross margin over fiscal 2028-2030, suggesting some normalization from the latest peak level. Investors are assessing whether this guidance is achievable if NAND pricing stops rising as quickly as it has been over the past year. So, what should investors do with the stock? Let’s find out.
SNDK Suffers From Weak Consumer and Edge Markets
The spectacular datacenter performance masks softer areas of Sandisk’s portfolio. Consumer revenues fell 32% sequentially and 5% year over year in the fiscal fourth quarter. Sandisk also acknowledged that PCs and smartphones are undergoing an adjustment period as the market shifts away from lower-end devices toward AI-enabled and premium configurations. Sandisk does not expect these markets to return to growth until calendar 2027. This near-term demand uncertainty may be weighing on sentiment despite strong AI infrastructure growth.
Sandisk also indicated that AI is not yet a major driver of Edge storage demand, with the AI benefit currently much more visible in datacenters. A slower-than-expected PC or smartphone recovery could constrain growth outside the datacenter business.
The increasing datacenter mix brings higher-value products but also higher component requirements. Sandisk noted that enterprise SSDs require additional components, including DRAM, meaning unit costs can increase even as gross margins remain attractive. The company specifically said DRAM and other non-memory component costs have been rising.
Moreover, investors continue to worry that strong AI demand could eventually encourage excessive industry capacity additions, reviving the NAND sector’s historical boom-and-bust pattern. Sandisk reiterated its intention to plan around sustainable mid-to-high-teens growth rather than aggressively adding supply.
Sandisk is also suffering from stiff competition from the likes of Micron (MU - Free Report) , Seagate (STX - Free Report) and Western Digital (WDC - Free Report) . In the past three months, Sandisk shares have declined 22.2% while shares of Micron, Seagate and Western Digital have dropped 11.7%, 9.9% and 29.9%, respectively. The broader Zacks Computer & Technology appreciated 6.7% over the same time frame.
SNDK’s Price Performance
Image Source: Zacks Investment Research
Sandisk Rides on Improving Revenue Visibility
Sandisk’s eight New Business Model (NBM) agreements are expected to represent more than 50% of its bits in fiscal 2027 and roughly two-thirds in fiscal 2028. At floor pricing, the signed NBMs represent a minimum of $93.9 billion in expected revenues, while remaining performance obligations (RPO) would total $91.1 billion, including agreements signed after quarter-end. The contracts also carry $16.5 billion of financial guarantees. NBMs are now expected to cover more than half of Sandisk’s bits in fiscal 2027 and approximately two-thirds in fiscal 2028. This multi-year visibility potentially makes the company’s earnings stream more predictable than under the traditional spot-driven NAND model.
For the first quarter of fiscal 2027, Sandisk expects revenues in the $10.3-$10.8 billion range compared with $8.97 billion, up 51% sequentially and 372% year over year. The company expects sequential revenue growth to be supported by both higher bit shipments and higher pricing. The company also said customer demand is growing faster than supply and expects bits to remain on allocation beyond calendar 2027, signaling a favorable supply-demand environment that could support pricing and profitability. It expects non-GAAP gross margin in the 83-85% range and earnings in the $44-$46 per share range.
AI inference and rising Datacenter storage intensity are likely to remain Sandisk’s most important growth drivers. The company believes AI is becoming increasingly memory-centric and storage-intensive as inference and agentic AI generate more data that must be stored, retrieved and served at low latency. Sandisk expects the enterprise Datacenter flash market to reach approximately 1.2 zettabytes by 2030 as the need for token proliferation and KV-cache requirements accelerates.
For fiscal 2028 through fiscal 2030, Sandisk targets mid-to-high-teens revenue growth, non-GAAP gross margins of approximately 80%, operating margins of roughly 75% and adjusted free cash flow margins of approximately 50%. Strong profitability is expected to help the company generate healthy cash flow to support share repurchases. The company spent $4.5 billion on repurchases during the fiscal fourth quarter and subsequently added $14 billion to SNDK’s repurchase authorization, leaving $15.5 billion available. Sandisk expects to return 100% of excess cash to shareholders after investing in the business.
SNDK’s Earnings Estimate Revision Trend Steady
The Zacks Consensus Estimate for first-quarter fiscal 2027 earnings is currently pegged at $46.23 per share, unchanged over the past 30 days. The company reported earnings of $1.22 per share in the year-ago quarter.
The consensus estimates for fiscal 2027 earnings are currently pegged at $213.31 per share, up by a penny over the past 30 days. Sandisk reported earnings of $70.88 per share in fiscal 2026.
SNDK Shares Are Trading at a Premium
Sandisk has a Value Score of C, which suggests the stock is trading at a premium.
In terms of forward-12-month price/sales (P/E), Sandisk shares are trading at 5.17X, higher than the Zacks Computer Storage Devices’ 3.32X and Micron’s 4.81X but lower than Seagate’s 10.24X and Western Digital’s 7.90X.
SNDK Stock’s Valuation
Image Source: Zacks Investment Research
Conclusion
Sandisk’s strong exposure to AI-driven datacenter storage, improving revenue visibility from its multi-year NBM agreements and favorable supply-demand conditions support its long-term growth prospects. The company’s expanding enterprise SSD portfolio, robust pricing environment and significant share-repurchase authorization further strengthen the investment case. However, weakness across Consumer and Edge markets, rising component costs and the inherently cyclical nature of the NAND industry remain concerns. Moreover, its premium valuation leaves limited room for execution setbacks if pricing or demand moderates.
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Sandisk Drops 23% From 52-Week High: Buy, Sell or Hold the Stock?
Key Takeaways
Sandisk (SNDK - Free Report) shares closed at $1816.57 on Wednesday (Sept. 23), dropping 22.8% from the 52-week high of $2354.39 hit on June 22. Investors have been assessing how sustainable Sandisk’s unusually strong pricing, margins and AI-driven growth is.
In the fourth quarter of fiscal 2026, revenues surged 51% sequentially to $8.97 billion, with roughly two-thirds of the sequential increase coming from higher pricing rather than volume. Non-GAAP gross margin reached 84.6%, up sharply from 26.4% a year earlier. SNDK now expects roughly 80% gross margin over fiscal 2028-2030, suggesting some normalization from the latest peak level. Investors are assessing whether this guidance is achievable if NAND pricing stops rising as quickly as it has been over the past year. So, what should investors do with the stock? Let’s find out.
SNDK Suffers From Weak Consumer and Edge Markets
The spectacular datacenter performance masks softer areas of Sandisk’s portfolio. Consumer revenues fell 32% sequentially and 5% year over year in the fiscal fourth quarter. Sandisk also acknowledged that PCs and smartphones are undergoing an adjustment period as the market shifts away from lower-end devices toward AI-enabled and premium configurations. Sandisk does not expect these markets to return to growth until calendar 2027. This near-term demand uncertainty may be weighing on sentiment despite strong AI infrastructure growth.
Sandisk also indicated that AI is not yet a major driver of Edge storage demand, with the AI benefit currently much more visible in datacenters. A slower-than-expected PC or smartphone recovery could constrain growth outside the datacenter business.
The increasing datacenter mix brings higher-value products but also higher component requirements. Sandisk noted that enterprise SSDs require additional components, including DRAM, meaning unit costs can increase even as gross margins remain attractive. The company specifically said DRAM and other non-memory component costs have been rising.
Moreover, investors continue to worry that strong AI demand could eventually encourage excessive industry capacity additions, reviving the NAND sector’s historical boom-and-bust pattern. Sandisk reiterated its intention to plan around sustainable mid-to-high-teens growth rather than aggressively adding supply.
Sandisk is also suffering from stiff competition from the likes of Micron (MU - Free Report) , Seagate (STX - Free Report) and Western Digital (WDC - Free Report) . In the past three months, Sandisk shares have declined 22.2% while shares of Micron, Seagate and Western Digital have dropped 11.7%, 9.9% and 29.9%, respectively. The broader Zacks Computer & Technology appreciated 6.7% over the same time frame.
SNDK’s Price Performance
Image Source: Zacks Investment Research
Sandisk Rides on Improving Revenue Visibility
Sandisk’s eight New Business Model (NBM) agreements are expected to represent more than 50% of its bits in fiscal 2027 and roughly two-thirds in fiscal 2028. At floor pricing, the signed NBMs represent a minimum of $93.9 billion in expected revenues, while remaining performance obligations (RPO) would total $91.1 billion, including agreements signed after quarter-end. The contracts also carry $16.5 billion of financial guarantees. NBMs are now expected to cover more than half of Sandisk’s bits in fiscal 2027 and approximately two-thirds in fiscal 2028. This multi-year visibility potentially makes the company’s earnings stream more predictable than under the traditional spot-driven NAND model.
For the first quarter of fiscal 2027, Sandisk expects revenues in the $10.3-$10.8 billion range compared with $8.97 billion, up 51% sequentially and 372% year over year. The company expects sequential revenue growth to be supported by both higher bit shipments and higher pricing. The company also said customer demand is growing faster than supply and expects bits to remain on allocation beyond calendar 2027, signaling a favorable supply-demand environment that could support pricing and profitability. It expects non-GAAP gross margin in the 83-85% range and earnings in the $44-$46 per share range.
AI inference and rising Datacenter storage intensity are likely to remain Sandisk’s most important growth drivers. The company believes AI is becoming increasingly memory-centric and storage-intensive as inference and agentic AI generate more data that must be stored, retrieved and served at low latency. Sandisk expects the enterprise Datacenter flash market to reach approximately 1.2 zettabytes by 2030 as the need for token proliferation and KV-cache requirements accelerates.
For fiscal 2028 through fiscal 2030, Sandisk targets mid-to-high-teens revenue growth, non-GAAP gross margins of approximately 80%, operating margins of roughly 75% and adjusted free cash flow margins of approximately 50%. Strong profitability is expected to help the company generate healthy cash flow to support share repurchases. The company spent $4.5 billion on repurchases during the fiscal fourth quarter and subsequently added $14 billion to SNDK’s repurchase authorization, leaving $15.5 billion available. Sandisk expects to return 100% of excess cash to shareholders after investing in the business.
SNDK’s Earnings Estimate Revision Trend Steady
The Zacks Consensus Estimate for first-quarter fiscal 2027 earnings is currently pegged at $46.23 per share, unchanged over the past 30 days. The company reported earnings of $1.22 per share in the year-ago quarter.
Sandisk Corporation Price and Consensus
Sandisk Corporation price-consensus-chart | Sandisk Corporation Quote
The consensus estimates for fiscal 2027 earnings are currently pegged at $213.31 per share, up by a penny over the past 30 days. Sandisk reported earnings of $70.88 per share in fiscal 2026.
SNDK Shares Are Trading at a Premium
Sandisk has a Value Score of C, which suggests the stock is trading at a premium.
In terms of forward-12-month price/sales (P/E), Sandisk shares are trading at 5.17X, higher than the Zacks Computer Storage Devices’ 3.32X and Micron’s 4.81X but lower than Seagate’s 10.24X and Western Digital’s 7.90X.
SNDK Stock’s Valuation
Image Source: Zacks Investment Research
Conclusion
Sandisk’s strong exposure to AI-driven datacenter storage, improving revenue visibility from its multi-year NBM agreements and favorable supply-demand conditions support its long-term growth prospects. The company’s expanding enterprise SSD portfolio, robust pricing environment and significant share-repurchase authorization further strengthen the investment case. However, weakness across Consumer and Edge markets, rising component costs and the inherently cyclical nature of the NAND industry remain concerns. Moreover, its premium valuation leaves limited room for execution setbacks if pricing or demand moderates.
Sandisk currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.