Sandisk shares dropped 7% in after-hours trading Wednesday. The memory chipmaker had just posted a stunning fiscal fourth quarter beat, but what investors fixated on was the forward outlook. Revenue guidance for the next quarter landed below the inflated expectations Wall Street had built into the stock price.

The fall came after an already rough 5.4% slide during regular trading. This wasn't a slow bleed either. Sandisk had ridden a 400% gain through 2026 on the back of surging demand for storage in AI data centers. The stock had gotten ahead of itself.

The actual results were undeniably strong. Fourth quarter revenue hit $8.97 billion, up 51% from the prior quarter and 372% year-over-year. Analysts had modeled $8.48 billion. Adjusted earnings came to $39.25 per share versus the expected $34.96. The company's gross margin swelled to 84.6% from 78.4% in the previous quarter, evidence that Sandisk was capturing pricing power as AI infrastructure demand kept climbing.

Data center revenue alone delivered $2.98 billion, up 103% sequentially and beating the $2.74 billion consensus. The company disclosed that roughly one third of sequential growth came from volume increases, while two thirds came from higher pricing. Edge revenue rose 48% to $5.43 billion. Consumer business contracted 32% to $556 million, a sign of where the real money was flowing.

Then came the letdown. For fiscal first quarter 2027, Sandisk guided revenue to a range of $10.3 billion to $10.8 billion. The midpoint of $10.55 billion fell short of the $10.8 billion Wall Street had been pricing in. Adjusted earnings guidance landed between $44 and $46 per share, with the midpoint slightly above expectations at $44.72, but the overall tone wasn't strong enough to justify the stock's prior momentum.

To cushion shareholder morale, Sandisk expanded its buyback authorization by $14 billion, bringing total remaining authorization to $15.5 billion. The company had already repurchased $4.52 billion during fiscal 2026. The signal was clear: management saw value at current levels, even if the market didn't.

Sandisk stock fell another 2% in early trading following the release.

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