Revenue surged 372%, a massive $14 billion buyback, yet SanDisk's stock price still plunged 8%—what exactly is the market afraid of?
After the market closed on Wednesday Eastern Time, SanDisk's earnings call felt like a funeral.
Revenue was $8.97 billion, up 372% year-over-year. Adjusted EPS was $39.25, compared to $0.29 a year ago—a 135-fold increase. Gross margin was 84.6%, up from 26.2% a year ago.
The board also approved a new $14 billion buyback plan, bringing total buyback authorization to $15.5 billion.
And then?
After-hours, the stock dropped as much as 8%.
During regular trading hours, it had already fallen 5.4%, then took another hit after hours. Within a single day, billions in market value vanished.
Do you know anyone who gets so excited by earnings data they can't sleep, only to check their account and be stunned?
Where's the problem?
The guidance.
SanDisk guided next quarter's revenue between $10.3 billion and $10.8 billion, with a midpoint of $10.55 billion. Wall Street was expecting $10.8 billion.
A $250 million shortfall.
Just that $250 million, and the market handed down a death sentence.
Goldman Sachs analyst James Schneider reiterated a buy rating after hours with a $2200 price target. Among 30 Wall Street analysts, 25 recommend buying, with an average target price of $2433.
But it didn't matter. The stock fell anyway.
What’s even more painful is that SanDisk itself knows where the problem lies.
The earnings report clearly states: Q4 revenue growth was one-third from volume increases and two-thirds from price hikes.
In plain terms: the good performance isn’t because they sold more, but because they sold at higher prices.
A year ago, data center business accounted for only 12% of shipments; now it’s 38%. AI customers are scrambling for supply, and SanDisk’s 2026 capacity is already sold out.
But the market is asking a different question now: how long can prices keep rising?
SanDisk’s answer: next quarter gross margin guidance is 83%–85%, basically flat, showing signs of peaking.
Even tougher is the long-term view.
SanDisk has signed eight long-term NBM agreements guaranteeing $93.9 billion in revenue. Over half of 2027 supply is locked in, and two-thirds in 2028.
Sounds stable, right?
But from another angle: long-term agreements lock in price ceilings.
SanDisk expects the global NAND market to exceed $300 billion in 2026 and approach $500 billion in 2027. The pie is getting bigger, but what about SanDisk’s share? Counterpoint data shows SanDisk’s global NAND market share was only 13% in Q1 2026.
No matter how big the pie, there are more knives cutting it.
Samsung, SK Hynix, Micron, ChangXin—all four are expanding production. ChangXin just went public on the A-share market with a market cap of 3.31 trillion. SK Hynix just listed on Nasdaq in July, raising $26.5 billion.
In the capital markets, every penny is betting on the same story: AI storage.
The question is—when everyone is betting on the same story, how long can that story last?
To be frank.
SanDisk’s earnings report itself is not the problem; the problem is market expectations.
The stock has risen 470% this year. Among 30 analysts, 25 recommend buying. The market has already played the "AI storage demand continues to grow" script to the extreme.
Any signal that is "not perfect enough" will be magnified as evidence of a "cycle peak."
SanDisk’s CEO said on the call: "In the past, we could only forecast demand within three months; now we have locked-in purchase volumes for over four years."
But the market can’t even tolerate guidance missing by one quarter.
This is not SanDisk’s problem.
It’s the entire AI sector’s problem—expectations have outpaced reality by too much.
372% revenue growth isn’t enough, 135-fold EPS growth isn’t enough, $14 billion buyback isn’t enough.
The market wants: perpetual growth.
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