SanDisk Selling Off After Amazing Earnings – What Now?

I know I can't be the only one asking the question, what the heck is going on with SanDisk? What's going on, guys? It's Ricky with Tech Solutions, and I want to answer that question for you. Why is SanDisk selling off after reporting amazing earnings? And I'll save you. Oh, I'm going to get into the details. I want to share some of the numbers. SanDisk reported amazing earnings. You're going to see some analysts try to like cherrypick like some of the um numbers that they reported. Oh, but this could they did great. They did great through and through. Like it goes back to the the simple idea that Wall Street always does and it's it's already priced in. Like there is no other excuse you can come up with other than that as of right now. There could be uncertainty about if SanDisk could possibly maintain the this type of gross margin because they've been aggressively raising their prices for some of their best performing products and because of that their gross margins are insane. So I wanted to share some of the details that I've learned about SanDisk. Um and you guys let me know down in the comments section how I do right. SanDisk down 8% on the day. Western Digital down 11.8. App 111 was down 27%. Now it's only down 15. So not a good day for a lot of these companies that reported earnings, but we're going to focus right now on SanDisk. So first off, again jumping on to the investing pro software. SanDisk, according to Fair Valley, there's about 15.7% upside. P ratio 44.4 times its earnings. Not incredibly expensive, but also not super cheap, right? Revenue 13.1 billion. Net income for 4.5 billion. We all know about that, right? Earnings absolutely I mean they killed it. Let's go ahead and start off with that. When it comes down to SanDisk earnings beat on EPS, $3925 per share. Tesla could never I said it once, I'll say it again. Tesla could never come in with these numbers. Revenue 8.9 billion in revenue beat by 7%. Look at these numbers. You can't even read that. 13,434% year-over-year growth for its EPS revenue 372% year-over-year. EPS quarter over quarter 60 up up 68% revenue up 51% quarter-over- quarter again incredible stock sells off okay where did it kind of like maybe not fully exceed uh Wall Street expectation guidance guidance for revenue was estimated to be right around 11 billion came in at 10.3 10.8 name eh like not that not that significant adjust adjusted EPS came in right in line again not a huge beat just nothing crazy adjusted gross margin like this is the crazy part we're talking about a gross margin 83 to 85% that's insane that's unheard of and I think that's where really maybe the concern concern might be without anyone actually talking about it. Can SanDisk throughout the years continue to maintain that's really the big question gross margins of 83 to 85%. If they cannot and it begins to drop from 83 85 to 80 then 75 then 70 back down to 60 maybe because if demand slows down capex spending begins to go down alternatives end up presenting themselves. This would deeply affect the valuation of SanDisk of how much it's already trading as a premium. kind of like where the cyclical part idea concern gets presented with SanDisk, right? Memory chip companies often are viewed to be cyclical. They come through cycles. Uh there's high demand. It tends to be short-lived and then eventually they end up falling apart. But then there's this weighted average contract duration is above four years. they're sold out for the next four years on average. I I just don't understand how um like that within itself I I think there's a lot of reassurance, but again the big concern is maybe the gross margins. SanDisk data center revenue has jumped 103% over the last quarter, 1,298% year-over-year. Um and just the cherry on top that this is what I view it as. SanDisk approves a $14 billion share buyback. This just provides reassurance that the company is also like something that Micro Strategy would never they would never buy back their shares. I also believe that like when Tesla is incredibly inflated, Tesla would never buy back their shares, you know, at over inflated levels. This just shows that they have confidence not only in their product but in their company and they're willing to reinvest and own more of it, right? That being able to buy back $14 billion worth of their company. Um, and then also just a little side note, Microsoft AI sales mostly come from OpenAI. Disclosure shows that about 70% uh is OpenAI, which kind of like um a little bit of a concern that so much is centered around just one company. But nonetheless, we're here talking about SanDisk. Where do we go from here? I I I do want to say after seeing this earnings report um and seeing how little confidence Wall Street has in SanDisk. Just knowing how greedy Wall Street is. I feel like there is a bigger problem that eventually will unfold and people like you and I, retail traders and investors will begin to kind of learn more about um NASDAQ market and S&P 500, right? S&P SPY just two days ago or a day ago was trading at all-time highs. SPY, right? NASDAQ market incredibly bullish, you know, nearly at all-time highs. Why? Why is the best performing stock of 2026 still down 42%. I think that there is something that is not being shared. The true concern, right, and I think a lot of it might have to do with like we can see that their demand is locked in for the next four years. their gross margins are incredibly attractive 80 in the 80%. Do they not think that it can sustain those gross margins for the years to come? Because then at that point, remember that's the profit that this company is set to make. At that point, if it's not producing at that same not just capacity, when it comes down to overall revenue, like Tesla makes a lot of money when it comes down to revenue, but they're gross margins are razor thin. They barely make any money, right? Especially no longer being subsidized by the US government anymore. Like, it's pathetic. That's why there's such a big disconnect between its valuation and what it actually makes as a business. SanDisk is kind of the opposite. You know, it's it's trading at a high price, but it also makes a ton of money. There has to be concern about its ability to continue to make as much as it does in the future. That's all I can kind of resort to. Um, so we'll see, right? Definitely I I was more eager to to own more SanDisk as it became a little bit more over oversold. Maybe I'll end up regretting it, but just based off of what I'm seeing on how the market's reacting, it provides me less reassurance that maybe I do want to be, you know, I don't mind having some skin in the game with SanDisk, but yeah, maybe after a 400% run up year to date, right? Because it's still up. Yeah, 400% but at one point it was up 890%. Maybe I do want to give it a little bit of breathing room, right? So, I think that's kind of what where I'm going to go from here. I'm not afraid to have some exposure into this company as an investment. Uh but I definitely don't want to have too much just in case it does get worse before it gets better. That's my two cents on it. Again, reported amazing earnings. We'll see how the days follow. Maybe I'll end up regretting completely not buying the dip. Um, but I kind of just want to learn more about the business and see how and what Wall Street ends up making out of it. So, I'll do my part in keeping you guys up to date. Again, the big focus as of right now is NASDAQ market is testing a critical range. It's testing a previous resistance range. And if NASDAQ begins to sell off, if right, it's still not confirmed. We're still waiting to hear if the peace deal between Iran and the US gets confirmed because remember it was supposed to be agreed upon today. And now Trump pushed down the deadline until tomorrow and then now I'm hearing it's till the end of the week. So it's the whole trade war all over again. Deal or no deal. But as of right now, markets are at a critical point where if it does break support, there's a big gap down. And if overall markets begin to drop, then your favorite tech companies will most likely fall as well. So, we'll talk about it in a little bit more detail in tomorrow's live trading session. 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