Goldman Sachs: SanDisk Earnings Beat Expectations but Guidance Misses Most Optimistic Outlook, Initiates Coverage with Buy

According to TechFlow Research, SanDisk's Q2 revenue was $8.97 billion, exceeding Goldman Sachs' expectation by 1.4% and market expectation by 2.9%, with a gross margin of 84.6% and non-GAAP EPS of $39.25. The Q3 revenue guidance midpoint is $10.55 billion, below Goldman Sachs' expectation by 9.5% and market expectation by 5.4%; gross margin guidance of 84% is 267 basis points below market expectation; EPS guidance midpoint of $45 meets market expectation but is lower than Goldman Sachs' $49.95. The stock price has retraced 40% from its June high. Goldman Sachs issued a Buy rating in its first coverage report on August 5, with a target price of $2,200, corresponding to approximately 54% upside potential. Goldman Sachs believes the negative reaction after the earnings report is mainly due to expectation gap correction, not fundamental deterioration; AI data center demand for NAND is forming a new growth curve, and newly signed long-term agreements are improving revenue visibility. Goldman Sachs maintains a Neutral rating on Micron, believing SanDisk's poor guidance will also drag down Micron, as the two companies' end-user demand in the NAND storage market highly overlaps.