SanDisk's Q1 Profit Estimates Fall Short Due to Higher Fab Startup Costs

SanDisk's Q1 adjusted EPS guidance of $0.70-$0.90 fell short of Visible Alpha's forecast of $0.95. The company expects fab startup costs of $60mln, up from $42mln in Q4. Despite the disappointing outlook, SanDisk reported better-than-expected Q4 results with adjusted EPS of $0.29 and revenue of $1.90bln, beating analyst expectations. Shares dropped nearly 5% on the news.

SanDisk Corporation (NASDAQ: SNDK) reported its fiscal fourth-quarter (Q4) results on August 14, 2025, which included better-than-expected earnings and revenue. However, the company's outlook for the first quarter (Q1) of fiscal 2026 fell short of analyst expectations, leading to a significant drop in its stock price. The company's adjusted diluted earnings per share (EPS) for Q1 2026 is expected to be in the range of $0.70 to $0.90, which is below the $0.95 forecast by Visible Alpha [2].

The disappointing Q1 outlook is attributed to fab startup costs, which are anticipated to be $60 million for the current quarter, up from $42 million in Q4 2025. CEO David Goeckeler explained that the startup costs are an "episodic event" and that the company expects these costs to decrease throughout the fiscal year, potentially turning headwinds into tailwinds [2].

Despite the Q1 outlook, SanDisk's Q4 results were strong, with adjusted EPS of $0.29 and revenue of $1.90 billion, both of which exceeded analyst expectations. The company's gross margin for Q4 2025 was 26.4%, matching expectations and rising 370 basis points sequentially. The company's revenue for Q4 2025 increased by 12% year-over-year, with operating expenses decreasing by 79% from Q3 2025 to Q4 2025 [3].

SanDisk's stock price has added a quarter of its value since its spin-off from Western Digital (WDC) in February 2025. However, the company's shares slumped by nearly 5% on the news of the Q1 guidance [2]. The company's stock price has been volatile in recent months, reflecting the market's uncertainty about the impact of fab startup costs and the company's ability to navigate the NAND market, which is expected to remain in undersupply through calendar 2026 [1].

Investors should closely monitor SanDisk's progress in managing its fab startup costs and its ability to capitalize on the favorable supply and demand environment in the NAND market. The company's stock price may remain volatile in the near term, reflecting the market's expectations for the company's ability to execute its business plan.

References:
[1] https://finance.yahoo.com/news/sandisk-falls-despite-upbeat-guidance-210239882.html
[2] https://www.investopedia.com/sandisk-stock-drops-as-profit-estimates-come-up-short-on-fab-startup-costs-11791690
[3] https://investor.sandisk.com/news-releases/news-release-details/sandisk-reports-fiscal-fourth-quarter-2025-financial-results