SanDisk shares plunged roughly 6% on Wednesday, reversing part of the spectacular 1,747% rally that began in early 2025. The drop marks the steepest one-day decline since December and reflects growing caution among momentum traders who have chased the stock higher on the back of back-to-back record quarters. Trading volume spiked 45% above the 30-day average, suggesting institutional investors were heavy sellers during the pullback.

In its most recent quarter, SanDisk reported revenue of $3.03 billion, up 61% year-over-year and beating consensus estimates by $360 million. Non-GAAP earnings per share surged 404% to $6.20, compared with $1.23 a year earlier. Data-center storage revenue climbed 64% sequentially to $440 million, driven by hyperscaler orders for high-density flash modules. The company’s gross margin expanded to 50.9%, up from 32.3% in the prior year, highlighting improved operational leverage as fixed costs are absorbed by growing volumes.

Hyperscale cloud providers have accelerated purchases of NAND flash as they race to support new generative AI workloads, creating a severe supply shortage across the industry. SanDisk’s advanced 3D NAND chips, which offer up to 30% lower power consumption and 20% higher throughput than previous generations, have become a preferred solution for AI training clusters. Industry estimates suggest NAND bit shipments will grow at a 40% compound annual rate through 2027, with SanDisk capturing an outsized share of that expansion.

Looking ahead, management expects third-quarter revenue between $4.4 billion and $4.8 billion, implying sequential growth of up to 58%. Non-GAAP EPS is forecast at $12 to $14, more than doubling the prior quarter’s result. The company anticipates gross margins of 65% to 67%, a further improvement driven by higher utilization of its new manufacturing lines. Analysts have raised their average revenue estimates for the full year by 12%, reflecting confidence that AI-driven demand will remain robust through at least early 2027.