TLDRs
- SanDisk surged after hours following Micron’s upbeat AI-driven earnings outlook.
- Investors are closely watching SanDisk’s data-center growth trajectory and valuation.
- Micron expects tight memory supply conditions to persist through 2027.
- SanDisk’s August earnings report could determine whether the rally continues.
SanDisk (NASDAQ: SNDK) shares surged in after-hours trading on Wednesday after Micron Technology’s stronger-than-expected earnings and bullish guidance reignited investor enthusiasm across the artificial intelligence memory sector.
The stock closed the regular session down 2.5% at $1,914.46 before reversing course after the bell, climbing roughly 9.5% to around $2,097. The sharp rebound came as investors digested Micron’s robust quarterly results and optimistic outlook, which fueled a broad rally among memory-chip companies.
The after-hours jump adds to an already extraordinary run for SanDisk shares. The stock has gained more than 700% since the start of the year and nearly 4,000% over the past 12 months, underscoring investor appetite for companies perceived to be beneficiaries of the ongoing AI infrastructure expansion.
Micron Ignites Sector Rally
Micron Technology (NASDAQ: MU) set the tone for the sector after reporting fiscal third-quarter revenue of $41.46 billion and adjusted earnings of $25.11 per share, both comfortably exceeding Wall Street expectations.
More importantly for investors, the company forecast fiscal fourth-quarter revenue of approximately $50 billion, representing sequential growth of roughly 21%. Micron shares rallied more than 15% in extended trading following the announcement.
The upbeat forecast reinforced the view that demand for memory products used in AI servers and cloud infrastructure remains exceptionally strong.
Futurum Group Chief Executive Daniel Newman said the market continues to underestimate the magnitude of AI-related spending.
“The size and scale of the AI build out has been underestimated at every turn,” Newman said.
He added that memory suppliers could continue benefiting from “premium pricing” as long as industry supply remains constrained.
Micron Chief Executive Sanjay Mehrotra echoed that sentiment, noting that tight market conditions could persist beyond 2027, suggesting sustained demand for advanced memory products.
Data Center Exposure Under Scrutiny
Despite the enthusiasm surrounding SanDisk, investors remain focused on one key question: whether the company’s data-center business is expanding rapidly enough to justify its soaring valuation.
SanDisk reported fiscal third-quarter revenue of $5.95 billion, representing year-over-year growth of 251%. Gross margin reached an impressive 78.4%, highlighting the profitability of the company’s higher-value product mix.
However, the composition of that revenue has attracted increased scrutiny.
Data-center sales contributed $1.47 billion during the quarter, accounting for approximately 25% of total revenue. By contrast, edge-related products generated $3.66 billion, or 62% of overall sales, while consumer products delivered $820 million.
The relatively modest contribution from data centers has led some analysts to question whether SanDisk should be valued primarily as an AI infrastructure company.
Micron, by comparison, generated roughly 61% of its fiscal third-quarter revenue from cloud memory and core data-center operations, giving it significantly greater direct exposure to the AI server market.
Strong Guidance Supports Bulls
SanDisk management remains optimistic about future growth.
The company expects fiscal fourth-quarter revenue between $7.75 billion and $8.25 billion, implying approximately 34% sequential growth at the midpoint. Non-GAAP earnings are projected to range between $30 and $33 per share.
Chief Executive David Goeckeler recently emphasized the company’s strategic shift toward higher-value markets.
“The highest-value end markets, led by Datacenter,” Goeckeler said, remain the company’s primary focus.
He also highlighted SanDisk’s emphasis on securing “multi-year customer engagements backed by firm financial commitments,” a strategy aimed at improving revenue visibility and supporting long-term expansion.
Several market observers believe earnings forecasts are beginning to catch up with the stock’s meteoric rise. Analysts expect SanDisk’s revenue to grow significantly in fiscal 2027, with consensus projections pointing to a sharp increase in profitability.
Some bullish investors continue to see substantial upside, citing strong demand trends, long-term customer contracts and the company’s ongoing transition toward higher-margin products.
August Earnings Become Key Test
Despite the renewed rally, volatility remains a significant risk.
SanDisk shares plunged 13% earlier this week, marking their steepest one-day decline since February as broader weakness swept through global memory stocks.
While few investors question the strength of AI-driven demand, many remain concerned about valuation levels and the stock’s susceptibility to sharp swings.
The next major catalyst is expected to arrive in August when SanDisk reports fiscal fourth-quarter results. Investors will be looking for evidence that growth in the company’s data-center business is accelerating fast enough to support its massive market capitalization and justify the stock’s remarkable ascent.
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