sandiskThe company’s stock soared 14% after the company missed Wall Street’s second-quarter earnings estimates as the artificial intelligence boom soared demand for its chips.
The flash storage memory company reported earnings per share of $6.20 excluding items, beating the $3.62 per share expected by analysts surveyed by FactSet. Revenue was $3.03 billion, exceeding expectations of $2.69 billion.
The stock had soared more than 20% premarket.
SanDisk’s third-quarter outlook also exceeded analysts’ expectations.
SanDisk had expected sales of $4.4 billion to $4.8 billion for the quarter. That blew out the $2.93 billion that FactSet had expected. The company expects third-quarter adjusted earnings to be between $12 and $14 per share, more than double the $5.11 per share that analysts expected.
Raymond James analysts upgraded the stock to an outperform rating, citing SanDisk’s pricing momentum as new supply struggles to come online.
“We know demand is very strong and will likely continue to grow, but supply is tight to the point where we could be sold out for several years,” the company said, adding that it believes it should benefit from “long-life” data center production.
Memory companies such as SanDisk are feeling a tailwind from a surge in memory demand as companies race to focus more storage supply on building the power-hungry data centers that power the AI revolution.
The company’s data center business grew 64% sequentially.
This backdrop also created a supply-demand imbalance, allowing memory companies to raise prices and maintain high margins.
SanDisk said it expects third-quarter gross margins to be in the range of 65% to 67%, well above the 49.3% expected by analysts surveyed by StreetAccount.
Memory shortages are hitting multiple areas of the technology sector. apple The company reported its own supply issues when it announced its first-quarter results on Thursday.
CEO Tim Cook said access to advanced node manufacturing is preventing further iPhone production, but the company will be hurt by rising memory prices.
Cook said Apple is considering “a range of options to address that.”
WATCH: SanDisk stock soars more than 15% after better-than-expected quarterly results
