SanDisk (SNDK) shares rose 3.53% to $1,302.96 in Friday premarket trading, rebounding from a sell-off on Thursday that followed the company's quarterly earnings report.

The post-earnings decline puzzled many market observers at first glance. SanDisk reported earnings per share of $39.25, surpassing the $34.45 consensus estimate by 13.9%. Revenue reached $8.97 billion, well above the $8.39 billion forecast and a sharp increase from the $1.9 billion posted in the same quarter a year earlier.

The drawdown appeared driven by investor focus on softer-than-expected near-term revenue guidance, along with questions about whether current margins can be sustained as the memory market evolves. The pullback underscores a recurring tension in the semiconductor space: even substantial beats can trigger selling when expectations have been bid up during an AI-driven demand surge for data center memory.

Long-Term Agreements Anchor Production Pipeline

CEO David Goeckeler told Reuters that SanDisk has shifted away from quarter-to-quarter deals in favor of long-term purchase agreements, which now carry a median duration of four years.

The company currently holds eight agreements with six customers, collectively valued at a minimum of $93.9 billion. Management expects half of fiscal 2027 production and two-thirds of fiscal 2028 output to be sold under these contracts.

Since April, SanDisk has signed five additional agreements, comprising three with new customers and two expansions of existing arrangements.

The move toward multiyear commitments marks a notable structural shift for a sector historically defined by cyclical pricing swings, where memory prices have alternated between periods of oversupply-driven declines and shortage-fueled spikes. Locking in demand years ahead gives SanDisk greater visibility as it plans capacity investment, though the approach also limits upside if spot prices rise sharply.

The board of directors approved a new $14 billion share repurchase program, raising the total remaining buyback authorization to $15.5 billion.

Analyst Reaction Remains Largely Positive

Wall Street maintained a broadly bullish stance despite the volatile market reaction.

Evercore ISI lowered its price target to $2,800 from $3,100 but retained its Outperform rating. The firm highlighted that projected gross margins of 83% to 85% came in above consensus and cited the new long-term agreements as a positive for demand visibility.

Morgan Stanley held its Overweight rating and $1,750 price target, noting that NAND demand remains durable. Wedbush maintained its Outperform rating and $2,000 target, suggesting SanDisk may be taking a conservative approach to its guidance.

Jefferies reduced its target to $1,750 from $3,000. Goldman Sachs indicated that elevated investor expectations likely contributed to the stock's decline and cautioned that the softer outlook could also pressure Micron (MU), a key competitor whose own results are closely watched as a barometer for the broader memory cycle.

On the more cautious side, RBC Capital kept its Sector Perform rating while raising its target to $1,300. Wells Fargo maintained its Equal-Weight rating and trimmed its target to $1,400. Citigroup retained its Buy rating but cut its target to $2,100.

The overall consensus rating remains Buy, with an average price target of $2,114.77. The stock trades at approximately 17.1 times earnings.

Technical Indicators and Market Context

From a technical perspective, SNDK trades roughly 49% above its 200-day simple moving average, though it remains 9% below its 20-day SMA and nearly 24% below its 50-day SMA. A key support level sits near $1,277.50.

The MACD indicator is holding above its signal line, suggesting easing selling pressure. Benzinga Edge assigns SNDK a Momentum Score of 99.87 and a Value Score of 22.15.

Broader markets provided a supportive backdrop on Friday, with Nasdaq futures up 0.48% and S&P 500 futures gaining 0.19%.