Sandisk just had an explosive quarter, announced a massive buyout and revealed an 8-for-1 stock split, but the stock still collapsed and took the entire memory sector with it. Which scared investors enough to sell one of this year’s hottest stocks…
A rising quarter, a massive buyback and a stock split couldn’t protect one of this year’s biggest winners in memory from a big selloff. Actions of Sandisk (NASDAQ: SNDK | SNDK Price Prediction) are at $1,212.85, down 9% in morning trading before the opening bell. THE VanEck Semiconductor ETF (NASDAQ:SMH), a concentrated chip fund, is at $532.40, down 5%. On the other hand, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is at $761.31, down 1%.
Sandisk’s decline comes after a decline during the Oct. 29 regular session preceding the report’s release. Despite this, Sandisk stock is up 460% year-to-date (YTD) through the previous session’s close, setting a high bar for any earnings report.
Sandisk beat estimates and raised its outlook for the second quarter
As of market close on October 29, Sandisk reported revenue of $11.03 billion for the first quarter of fiscal 2027, surpassing the $10.7 billion expected by Wall Street analysts. Adjusted EPS of $49.51, before the split, exceeded the $47.15 estimated by Wall Street analysts.
Looking ahead, Sandisk guided second-quarter fiscal 2027 adjusted EPS to between $55 and $57, above Wall Street analysts’ forecasts of $54.69. Sandisk’s revenue forecast of $12.2 billion to $12.6 billion is higher than the $12.29 billion expected by Wall Street analysts.
Data center demand drove the quarter, with Sandisk’s data center revenue increasing 61% sequentially to $4.8 billion in AI storage spending. In the end, company revenue rose 7%, to $5.83 billion, while consumer revenue fell 29%, to $397 million. Profitability remains exceptional, with an adjusted gross margin of 85.1%. CEO David Goeckeler cited “robust and growing demand for our products, which is driving faster growth in our data center business.”
How the Sandisk split and buyout affects shareholders
Sandisk repurchased 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 on November 20. For retirement savers, a split doesn’t change the value of Sandisk or anyone’s stake.
Western Digital, Seagate and Micron slide alongside Sandisk
Western digital (NASDAQ: WDC) stock is at $365, down 8%. This decline reduces a rally that still leaves Western Digital up 112% year to date, a much smaller gain than Sandisk.
Seagate Technology (NASDAQ:STX) stock is at $648.13, down 7%. Still up 136% since the start of the year, Seagate fell on October 28 after a record quarter, an early sign that good results were not enough for this group.
Micronic technology (NASDAQ:MU) is at $874, down 6%, the smallest decline of the group. Sitting on a 206% year-to-date gain, Micron slipped on Oct. 29 as Samsung Electronics’ results showed just how high expectations are for memory stocks. The VanEck fund owns Micron but none of the disk makers, which helps explain its more limited decline.
Sales also reached Seoul, where Samsung Electronics fell 6% and Kospi fell 5%. These losses reflect profit-taking in memory stocks around the world, with Sandisk caught in the same trend.
Flash, hard drives and DRAM put Sandisk in a different path
As a manufacturer of pure NAND flash, Sandisk produces wafers through a joint venture with Kioxia and sells much of its production under long-term customer agreements backed by advance payments.
Western Digital and Seagate make high-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 the main growth driver.
Sandisk’s pricing power faces its next test
Lip-Bu Tan, CEO of a major PC chipmaker, said Oct. 29 that soaring memory prices will remain a major challenge for the entire industry through 2027. It goes both ways for Sandisk: tight supply supports its prices, but the chipmaker says high prices are hurting PC demand. Overall sentiment is also fragile, as the NASDAQ Composite Index closed more than 1% lower on October 29 amid growing skepticism about AI trading.
Bulls may point to Sandisk management’s view that demand is strengthening, with most of next year’s shares already committed to long-term deals. Bears counter that Sandisk expects a seasonally weak third quarter of fiscal 2027 and that consumer sales are slowing due to rising prices.
Sandisk’s next test is whether data center demand holds its prices firm through split-adjustment entry. Another signal to watch is the stabilization of trading on Western Digital, Seagate and Micron. Some investors might prefer a cautious approach until the memory liquidation is resolved.
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