Sandisk shares dropped about 10% on Friday as technology-sector selling pressured high-growth stocks. The Nasdaq Composite fell 2.85%. The S&P 500 declined 1.41%. Benzinga Pro data showed Sandisk down 10.21% at $1,194.29 at publication on Friday.
Sandisk continues to gain from rising data center demand, better pricing and clearer long-term revenue prospects as artificial intelligence increases storage needs. Rosenblatt analyst Kevin Cassidy retained a Buy rating and a $2,400 price target. Cassidy based the target on a multiple of 10 times the analyst's fiscal 2028 non-GAAP earnings-per-share estimate.
Cassidy said Sandisk's fiscal first-quarter revenue reached $11.03 billion, increasing 378% from a year earlier and 23% from the previous quarter. Cassidy said the revenue beat the analyst's $10.55 billion forecast and the consensus estimate of $10.72 billion. Adjusted earnings of $49.51 per share surpassed Cassidy's $45.80 forecast and the $46.67 consensus. Data center revenue, the main contributor to growth, reached $4.80 billion, increasing 1,682% year over year and 61% sequentially. Sandisk reported an 85.1% non-GAAP gross margin. Sandisk reported $5.7 billion in adjusted free cash flow.
Cassidy said Sandisk's New Business Model agreements were exceeding expectations. Sandisk has agreements with eight customers covering about 50% of fiscal 2027 bit production and roughly two-thirds of fiscal 2028 production. The agreements provide minimum revenue commitments totaling $93.9 billion. Cassidy said prospective New Business Model agreements imply demand exceeding Sandisk's available supply through the end of the decade. Cassidy said investment-grade customers account for 95% of existing agreements, increasing confidence in long-term revenue prospects. Cassidy expects contracted production coverage to rise through additional customers and extensions of existing agreements.
Cassidy identified AI inference as a substantial additional opportunity for growth. Cassidy expects wider use of triple-level cell (TLC) and quad-level cell (QLC) enterprise solid-state drives, alongside key-value (KV) cache tiering, to increase data center NAND flash demand. Sandisk expects KV cache to represent roughly one-third of the AI data center flash market by the decade's end. Cassidy highlighted Sandisk's BiCS technology roadmap and emerging high-bandwidth flash (HBF) technology. Initial HBF samples are expected in 2027.
Cassidy increased the fiscal second-quarter revenue forecast from $12.20 billion to $12.40 billion. Cassidy increased the adjusted earnings-per-share forecast for that quarter from $52.98 to $56.90. Cassidy lifted the fiscal 2027 revenue forecast from $48.80 billion to $49.48 billion. Cassidy raised the fiscal 2027 adjusted earnings-per-share forecast from $210 to $221.28. Cassidy kept the fiscal 2028 revenue forecast at $60 billion. Cassidy increased the fiscal 2028 adjusted earnings-per-share forecast from $240 to $247.71.
Sandisk projected fiscal second-quarter revenue between $12.2 billion and $12.6 billion, above Cassidy's earlier estimate. Sandisk projected adjusted earnings of $55 to $57 per share for that quarter, also exceeding Cassidy's earlier estimate. Cassidy said Sandisk expects data center NAND bit demand to increase about 40% in 2027. However, Sandisk plans disciplined bit production growth in the mid-to-high teens instead of aggressive capacity expansion.
Sandisk Stock Drops 10% Amid Tech Sector Sell-Off
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Summary
Sandisk (NASDAQ:SNDK) shares fell about 10% on Friday, dragged down by a tech sector selloff. The Nasdaq Composite dropped 2.85%, and the S&P 500 fell 1.41%. Despite the decline, Sandisk posted Q1 revenue of $11.03 billion, up 378% year-over-year, with adjusted EPS at $49.51. Analyst Kevin Cassidy from Rosenblatt kept a Buy rating with a $2,400 target, pointing to strong data center demand and AI-driven growth. Investors using value investing in crypto may look for support and resistance levels as the stock faces near-term volatility.
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