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Memory giant Sandisk (NASDAQ: SNDK) didn't even exist as a stand-alone company two years ago, and now it's one of the most important companies in artificial intelligence (AI) development. Its stock is up an eye-popping 566% so far in 2026, but since mid-year, it has gotten harder to please the market. Here's what to look for when it reports its fiscal 2027 first-quarter results on Oct. 29, and whether you should buy the stock beforehand.
Sandisk makes many memory products, including the SD memory cards that have been popular for years. Today, it's booming because it's one of the few major makers of NAND flash memory products critical to AI.
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The cycle that made this the case has moved so rapidly that its direction and magnitude were not obvious when Western Digital (which bought SanDisk in 2016) spun the flash memory business back off as Sandisk in February 2025. The stock languished for its first few months on the market as an unprofitable venture, but it soared as the AI data center build-out accelerated, the amounts of memory that AI processors required expanded, and NAND became a key and undersupplied commodity.
Sandisk's growth has been phenomenal since then. The company has become massively profitable, and it doesn't look like it's slowing down. In its fiscal 2026 fourth quarter (which ended July 3), revenue increased a stunning 372% year over year, and its gross margin was 84.6%. Operating income increased from $18 million in the prior-year period to more than $7 billion this year.
Memory has historically been a cyclical market, and management is planning for changes by changing its model and leaning into innovation. It has begun signing sales deals under what it calls its new business model, and as of the end of its fiscal Q4, it had locked in multiyear agreements with eight clients, giving it more reliable revenue streams than it previously had. It's also partnering with memory competitor SK Hynix to standardize memory components, which would be to both of their benefit, and it's upgrading its NAND technology to stay dominant in the space.
In the short term at least, growth is expected to remain very high. For the first quarter of its fiscal 2027, management is guiding to $10.55 billion in revenue at the midpoint, a 346% year-over-year increase, and a gross margin of about 84%. Wall Street is looking for $46.27 in earnings per share (EPS), up from $1.22 last year, and Sandisk tends to beat on expectations.
The stock is now more than 35% off its summer peak, and a strong beat could boost the stock price immediately. However, the market's reaction will take into account many factors, particularly management's updated guidance and whatever it reveals about additional new business model agreements the company has signed.
By some measures, Sandisk stock isn't expensive, trading at under 22 times trailing-12-month earnings. Consider that if it adds more than $40 to EPS, the stock could easily jump without changing the ratio.
I wouldn't be surprised if Sandisk stock soars after earnings, but given its volatile nature, I'd take a cautious approach.
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Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Western Digital. The Motley Fool has a disclosure policy.
Should You Buy Sandisk Stock Before Oct. 29? was originally published by The Motley Fool
