U.S. NAND flash manufacturer SanDisk reported results that significantly exceeded market expectations, driven by increased demand for artificial intelligence (AI) data centers and rising memory prices. However, the company's revenue forecast for the next quarter fell short of investors' heightened expectations, leading to a decline in its stock price during after-hours trading.
On August 5, SanDisk announced that its revenue for the fourth quarter of fiscal year 2026 reached $8.965 billion, a 372% increase compared to the same period last year and a 51% rise from the previous quarter.
Excluding one-time costs, the adjusted earnings per share (EPS) was reported at $39.25, surpassing market expectations of $8.48 billion in revenue and an adjusted EPS of $34.96.
The company posted a net income of $6.93 billion, a turnaround from a net loss of $23 million in the same quarter last year. The gross profit margin also improved significantly, rising from 26.2% a year ago to 84.6%.
The improvement in performance was driven by rising NAND prices and increased demand for enterprise solid-state drives (SSDs) for AI data centers. Of the revenue increase from the previous quarter, approximately two-thirds came from price increases, while one-third was due to increased sales volume.
Revenue from the data center segment soared to $2.977 billion, nearly 14 times higher than the same period last year and more than double the previous quarter. The share of data center products in total NAND sales expanded from 12% a year ago to 38%.
Sales of products for smartphones and PCs reached $5.432 billion, a 48% increase from the previous quarter. In contrast, revenue from consumer products such as memory cards and USB storage devices fell to $556 million, a 32% decrease.
AI data centers and high-margin enterprise products have become the core drivers of SanDisk's growth, surpassing consumer storage devices.
SanDisk is also expanding supply contracts with customers who commit to purchasing a set volume at predetermined prices over an extended period. Currently, the company has contracts with eight customers in the data center and smartphone/PC sectors.
The guaranteed minimum revenue from these contracts amounts to $93.9 billion. The company expects that half of its sales volume for fiscal year 2027 and about two-thirds for fiscal year 2028 will be covered by long-term contracts. This strategy aims to mitigate significant fluctuations in performance even if NAND prices decline.
However, the outlook for the next quarter did not meet market expectations. SanDisk projected first-quarter revenue for fiscal year 2027 to be between $10.3 billion and $10.8 billion, with an adjusted EPS of $44 to $46.
The midpoint of the revenue forecast, $10.55 billion, falls short of the market expectation of approximately $10.8 billion. The gross profit margin is also projected to be between 83% and 85%, indicating a potential slight decrease from the current quarter's 84.6%.
SanDisk's stock closed down 5.4% at $1,350.50 during regular trading and fell further by over 5% in after-hours trading following the earnings announcement. While the quarterly results significantly exceeded market expectations, analysts noted that the guidance did not provide a strong enough outlook to surpass the already high expectations reflected in the stock price.
* This article has been translated by AI.
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