SNDK Stock Set To Revisit August Levels Despite Earnings Beat — Analysts Flag Valuation Concerns, Slowing Earnings Upside

• SanDisk’s first-quarter revenue rose 23% sequentially to $11.03 billion, while adjusted earnings per share of $49.51 beat estimates of $46.67.
• The company announced an eight-for-one forward stock split, effective Nov. 19, with split-adjusted trading expected to begin Nov. 20.
• Wells Fargo flagged slowing earnings upside, while Goldman Sachs and BofA remained positive on artificial intelligence-driven storage demand.

SanDisk (SNDK) shares plunged nearly 10% in Friday's premarket, putting the stock on track to revisit levels last seen in early August, despite the memory-chip maker reporting stronger-than-expected fiscal first-quarter earnings and issuing an upbeat outlook.

The decline came amid a broader selloff in technology and memory stocks, as investors assessed rising artificial intelligence (AI) spending and the sustainability of earnings growth.

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As of this writing, SNDK stock was down 9.62% and was among the top-trending tickers on Stocktwits.

SanDisk Beats Estimates, Announces 8-For-1 Split

SanDisk's fiscal first-quarter (Q1) revenue soared 380% year-over-year to $11.03 billion, beating market expectations of $10.72 billion, according to FactSet data. Adjusted profit also came in higher than expected at $49.51 per share, up from $46.67 per share in the year-ago quarter.

The company’s data center revenue surged to $4.80 billion, accounting for nearly 44% of total revenue. Adjusted gross margin reached 85.1%, while adjusted free cash flow totaled $5.70 billion.

For the fiscal second quarter, the company forecast revenue of $12.2 billion to $12.6 billion and adjusted earnings of $55 to $57 a share. Analysts had expected revenue guidance of $12.31 billion and EPS of $53.60.

The company also returned $5 billion to shareholders by repurchasing approximately 3.2 million shares during the quarter. Over the past two fiscal quarters, SanDisk repurchased 6 million shares, representing approximately 4% of shares outstanding.

The company also announced an eight-for-one forward stock split, effective November 19, with split-adjusted trading expected to begin November 20.

Analysts Remain Positive On AI Storage Demand

According to an Investing.com report, Goldman Sachs noted improving traction in SanDisk's data-center business, including multiple enterprise solid-state drive wins at hyperscaler customers.

The brokerage expects limited additions to NAND flash memory supply in the near term and continued improvements in SanDisk's product portfolio and mix.

BofA Securities also highlighted the growing importance of NAND storage for AI inference, while noting strong data-center demand. Both brokerages maintained their ‘Buy’ ratings despite lowering price targets.

Analysts Flag Valuation, Earnings Risks

According to TheFly, Wells Fargo expects SanDisk shares to digest a slowing pace of earnings upside despite another quarterly beat and guidance increase. 

The brokerage expects future share performance to depend on greater confidence in earnings stability across the memory cycle. BofA also lowered its valuation multiple to reflect concerns about late-cycle valuations, according to Investing.com.

Retail Investors’ Sentiment Around SNDK

On Stocktwits, retail investors’ sentiment around SNDK stock flipped to ‘extremely bullish’ amid high user message volume.

So far this year, SNDK shares have surged over 383%. By comparison, the Roundhill Memory ETF (DRAM), which holds the stock, has risen over 86% over the same period.

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