This article first appeared on GuruFocus.
Sandisk Corp. (SNDK, Financials), the flash-memory and data-storage company, pulled much of the memory-chip sector lower after its latest outlook failed to meet investors’ increasingly ambitious expectations.
Sandisk projected fiscal first-quarter revenue of $10.3 billion to $10.8 billion and adjusted earnings of $44 to $46 per share. Both ranges were above Wall Street estimates, but the stock still fell sharply before the opening bell.
The disappointment quickly spread. Western Digital dropped by double digits, while Micron and Seagate fell roughly 4%. SK Hynix and Samsung also suffered steep declines in South Korea.
The reaction reflects how high the bar has become after memory and storage stocks surged on demand from artificial-intelligence data centers. Strong results are no longer enough when investors have already priced in continued growth and higher memory prices.
Demand from data centers remains healthy, but weaker consumer electronics and personal-computer markets could limit some of that momentum.
Investors will next watch memory pricing and data-center orders for signs that the sector’s rally can support its elevated expectations.
