SandiskShares of ‘s stock jumped nearly 7% after the company crushed Wall Street’s fiscal estimates for the second quarter, as the artificial intelligence The boom has caused demand for its chips to skyrocket.
Flash storage memory The company reported earnings of $6.20 per share, excluding items, beating the $3.62 per share expected by analysts surveyed by FactSet. Revenue totaled $3.03 billion, beating forecasts of $2.69 billion.
Shares had jumped more than 20% in premarket trading.
Sandisk’s third-quarter guidance also beat analysts’ expectations.
Sandisk expects revenue between $4.4 billion and $4.8 billion for the quarter. This blew away the $2.93 billion expected by FactSet. The company expects third-quarter adjusted earnings of between $12 and $14 per share, more than double analysts’ estimate of $5.11.
Raymond James Analysts improved the stock to an outperform rating, citing Sandisk’s pricing momentum as new supplies struggle to come online.
“We know that demand is exceptionally strong and likely only increasing, with supply tightening to the point of potentially being exhausted for years,” the company wrote, estimating that the company stands to benefit from “longer-term” data center production.
Memory companies like Sandisk are seeing a surge in memory requirements, as companies rush to channel more storage resources into building the power-hungry data centers that are fueling the AI revolution.
The company’s data center business grew 64% sequentially.
This context has also created an imbalance between supply and demand which has allowed memory companies to increase their prices and maintain strong margins.
Sandisk said it expects third-quarter gross margins to be between 65% and 67%, well above the 49.3% expected by analysts surveyed by StreetAccount.
The memory shortage has affected several areas of the technology sector, and Apple cited its own supply issues in its first quarter report winnings THURSDAY.
CEO Tim Cook said access to advanced node manufacturing was preventing it from making more iPhones, but the company would be hit by the rise memory price.
Cook said Apple was exploring “a range of options to address this issue.”
WATCH: Sandisk stock jumps more than 15% on better-than-expected quarterly results
