Sandisk (SNDK) Stock Drops As Profit Surge Meets Valuation Doubts

Sandisk stock closed down 6.8% at US$1,258.58, capping a tough month for holders after a double digit slide over 30 days. That reaction sits awkwardly next to a quarter where revenue hit US$8.97b and non GAAP earnings per share jumped to US$39.25, both ahead of management guidance.

The real focus is not today’s drop but what this earnings release suggests about the multi year arc. Sandisk has moved from losses to a full year of profit and now trades on a trailing P/E of 16.4x, while a discounted cash flow estimate sits below the current share price.

Like that Sandisk has turned a loss into a full year of profit but are uneasy about paying up when a DCF sits below the current share price? Check out our 50 high quality undervalued stocks for ideas that combine earnings power with more conservative valuation signals.

FY 2026 Earnings Summary

• Revenue, Q4 FY 2026 vs. Q4 FY 2025: US$8,965m vs. US$1,901m (very large increase in quarterly revenue)
• Net Income, Q4 FY 2026 vs. Q4 FY 2025: US$6,903m vs. a loss of US$23m (swing to strong quarterly profit)
• Basic EPS, Q4 FY 2026 vs. Q4 FY 2025: US$46.96 per share vs. a loss of US$0.16 per share (sharp improvement in quarterly earnings per share)
• Revenue, FY 2026 vs. FY 2025: US$20,248m vs. US$7,355m (revenue a bit under 3x the prior year on a trailing twelve month basis)

Prefer visual charts to another wall of earnings tables and ratios? See Sandisk’s full financial picture in an easy dashboard that highlights valuation in context through our company report for Sandisk..

Sandisk bull case passes key AI and NBM tests

Bulls argue Sandisk is turning AI driven NAND demand and new business models into durable earnings power. The latest quarter offers solid proof points. Datacenter revenue of US$2,977m and strong non GAAP EPS of US$39.25 support the idea that hyperscaler demand is already flowing through the income statement. BiCS8 is now the majority of bit production, which matches the claim that technology transitions, not wafer adds, are driving mid teens bit growth. Multi year New Business Model contracts are no longer a slide headline. Eight customers, more than 4 year weighted average duration and US$93.9b of minimum contracted revenue show real progress toward less spot exposure. The US$5,035m of adjusted free cash flow, even after NBM prepayments, backs the view that this model can throw off cash while Sandisk invests in BiCS10 and High Bandwidth Flash.

Sandisk bear case flags cyclic, mix and guidance risks

Bears focus on cyclic risk, concentration and stretched expectations. The 6.8% one day share price fall and roughly 22% slide over 30 days suggest investors were leaning heavily on a straight line AI story. Q1 FY27 revenue guidance of US$10.3b to US$10.8b did not extend the step change of Q4 and undercuts the idea of an uninterrupted ramp. Mix also cuts both ways. Edge revenue of US$5,432m is large, yet CEO commentary points to PC and smartphone unit declines in the mid teens in 2026. That adds weight to concerns about consumer and edge fragility. Gross margin at 84.6% is very high and management already telegraphed a willingness to accept lower margins as NBMs expand. That partially validates fears that current profitability sits above a more normal run rate, even if floor pricing and US$59.8b of remaining performance obligations help limit downside volatility.

Compare Sandisk’s internal progress on BiCS transitions, high gross margins and long dated New Business Model contracts with how the street is reacting to a 6.8% one day share price fall and a softer looking revenue guide. See the consensus price target analysis for Sandisk to check whether analyst targets lean toward the bull case or the bear case.

Own Your Next Investing Move

If Sandisk’s mix of AI driven demand, high gross margins and long dated contracts has your attention after this volatile month, register for free with Simply Wall St and add it to a Watchlist to track share price against fair value and look for a better entry point. Once you hold Sandisk or other stocks, use the Portfolio Command Center to cut through day to day noise and surface only the key valuation, earnings and risk updates that matter. For longer term conviction, lean on the Community to see what other investors are focusing on and how they interpret the same data. By spotting potential catalysts and emerging risks early, you give yourself a better chance of staying ahead of the market.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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