Sandisk's stock is down after earnings. Here's what Wall Street has to say.

By Steve Goldstein and Britney Nguyen

The memory-chip maker's focus on durability over the long term supports strong earnings growth, analysts say

Sandisk's stock was off in premarket action on Thursday.

Sandisk's stock was sliding Thursday morning as the memory-chip company's guidance underwhelmed, especially in the wake of a fiery rally for the shares over the past year.

The company (SNDK) delivered a softer-than-expected outlook, which RBC Capital Markets analyst Srini Pajjuri pinned on moderating growth in the average selling price of NAND flash memory components, although he noted that the company issued upbeat commentary on the potential for strength in that market through next year.

He pointed to Sandisk's addition of three customers to its slate of new business model agreements, which make up a large portion of its volume for fiscal 2027 and 2028. The company initially announced five agreements in April and said Thursday afternoon it had extended two of those and signed three more. Altogether, the eight NBMs have a minimum expected revenue of $93.3 billion at floor pricing, according to Sandisk.

Although the long-term agreements allow Sandisk better visibility into demand, Pajjuri said he expects investors to remain skeptical about floor pricing for those deals, which Sandisk previously said are set up to support an 80% gross margin.

Therefore, he expects Sandisk's shares "to trade on traditional metrics until durability becomes more apparent, which could take time," he said in a note to clients.

Sandisk's stock was down about 11% in premarket trading Thursday.

Cantor Fitzgerald analyst C.J. Muse similarly expects there to be an adjustment period before investors come around to Sandisk's focus on long-term business durability, but he flagged that the company's earnings power "will be robust and grow nicely" through 2028 and beyond.

Sandisk's gross margin guidance of between 83% and 85% for the current quarter also indicated a potential contraction given the 84.6% it reported for the June quarter. Muse, however, thinks Sandisk is factoring in rising costs for data-center products and "real conservatism." In his view, the company's gross margin could actually expand on a sequential basis.

J.P. Morgan analyst Harlan Sur said Sandisk's June-quarter results, which came in ahead of Wall Street's expectations, "suggest a viable path toward stronger earnings power, dampened cyclicality, and more durable fundamentals."

With a large share of its revenue base being under its NBMs, Sandisk has not only improved its view into demand, but customers have better supply predictability, he said in a note.

Looking ahead, Cantor's Muse said the stock's next catalyst could come from Sandisk's analyst day later this month.

Evercore ISI analyst Amit Daryanani also said in a note that additional details about Sandisk's capital allocation and its plans for high-bandwidth flash memory at the event could provide a lift to shares.

-Steve Goldstein -Britney Nguyen

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08-06-26 0931ET