SANDISK, DUOLINGO, ELF, FIGMA, APPLOVIN, WESTERN DIGITAL, SMR EARNINGS | MARKET CLOSE

SUMMARY

Amit Kukreja and guests provided comprehensive live coverage of a major earnings day, analyzing results from SanDisk, Duolingo, ELF, Figma, AppLovin, Western Digital, and other high-profile tech and consumer companies. The discussion centered on the strong reported growth, market expectations, sector cyclicality, and the disconnect between robust financials and sharp after-hours stock declines.

MAIN POINTS

• Technical issues are resolved and the hosts discuss anticipation for SanDisk and Western Digital earnings, as well as the impact of Google DeepMind leadership changes. [3:00]
• The panel reviews the upcoming earnings slate, highlighting SanDisk, Western Digital, AppLovin, Duolingo, Figma, ELF, and other notable companies. [6:02]
• SanDisk is identified as the main focus, with expectations of strong earnings and discussion of previous quarter volatility and current bullish sentiment. [11:01]
• Shopify and Zeta are cited as examples of companies rebounding from negative sentiment, and viewers share recent trading moves. [13:00]
• Market closes with a slight downturn after a strong week; attention turns to after-hours earnings, especially SanDisk and Western Digital. [16:00]
• Axon reports a double beat, Western Digital posts solid but not spectacular results, and Duolingo surges after hours. [18:00]
• SanDisk beats on EPS and revenue but drops sharply after hours, while AppLovin falls 21% despite strong year-over-year growth. [21:01]
• Figma delivers a strong beat but reverses after initial gains; other tech names like Fastly and Dutch Bros also report, with mixed stock reactions. [23:01]
• ELF posts a massive beat but declines after hours, and DoorDash, Chime, and IQ show volatile moves despite positive or mixed results. [26:00]
• SanDisk's non-GAAP gross margins and guidance are dissected, with profit-taking and high expectations cited as possible reasons for the sell-off. [28:01]
• Fluence and HubSpot both disappoint on earnings, contributing to a broader negative sentiment across AI and SaaS stocks. [31:00]
• SMR misses revenue expectations by a wide margin, and the hosts joke about the low bar for public company status. [34:00]
• Occidental Petroleum (OXY) posts strong double-digit beats and is discussed as a major Buffett holding, while energy sector dynamics are reviewed. [35:04]
• Fastly raises guidance significantly, and VAVI's data center business shows strong growth, highlighting winners amid broader tech weakness. [37:00]
• SanDisk's Q1 guidance is analyzed, with concerns about valuation, cyclicality, and the sustainability of high margins and growth. [40:00]
• SanDisk's earnings call begins, emphasizing technology leadership, AI-driven demand, and the strategic importance of new business models (NBMs). [47:00]
• SanDisk details the expansion of NBMs, long-term customer agreements, and financial guarantees, projecting over $90 billion in minimum contracted revenue. [56:01]
• SanDisk reports record revenue, margins, and free cash flow, with data center and edge segments driving growth; capital allocation and buybacks are highlighted. [1:02:00]
• Q&A session addresses margin durability, buyback strategy, industry supply-demand dynamics, and the impact of new memory architectures. [1:09:02]
• SanDisk management stresses increased visibility and long-term customer commitments, with over four years of demand now contracted. [1:21:00]
• Discussion turns to capital expenditures, nodal transitions, and the company's strategy to maintain market share and manage inventory. [1:30:01]
• SanDisk executives elaborate on supply-demand convergence, the importance of deep customer relationships, and the evolving AI memory landscape. [1:37:01]
• The role of KV cache and high bandwidth flash in AI workloads is discussed, with management expressing optimism about future NAND requirements. [1:45:01]
• Post-call analysis centers on the challenges of cyclicality, the commodity nature of memory, and the disconnect between growth and valuation multiples. [1:53:00]
• Buybacks are debated as a use of excess cash, with skepticism about their efficacy in supporting long-term valuations for memory suppliers. [1:59:01]
• The panel discusses the risk of supply catching up with demand by 2027-2028, the potential for oversupply, and the implications for earnings and stock multiples. [2:06:01]
• Long-term agreements (LTAs) are considered a strategic shift, reducing the risk of abrupt demand changes and supporting more stable profitability. [2:10:01]
• Broader market context is reviewed, with SaaS and AI stocks facing sharp reversals and only a few names like Chime and Soundhound holding gains. [2:16:00]
• Jamie Dimon's comments on leverage and market structure are shared, adding to the discussion of systemic risks and market sentiment. [2:22:00]
• The hosts preview the next day's earnings, including DataDog and Celsius, and reflect on the volatility and unpredictability of current market reactions. [2:24:01]
• The session concludes with a summary of the day's themes: strong fundamentals, market skepticism, and the ongoing debate over the sustainability of the memory cycle. [2:25:02]

DETAILED ANALYSIS

The session provided an in-depth, real-time analysis of a major earnings day featuring high-profile technology and consumer companies, with SanDisk, Duolingo, ELF, Figma, AppLovin, and Western Digital at the center of attention. The discussion began with technical difficulties but quickly shifted to anticipation for earnings reports, particularly in the memory and AI sectors. The panel noted the significance of SanDisk and Western Digital as bellwethers for the memory trade, with expectations running high due to recent sector outperformance and strong results from peers like Seagate, SK Hynix, and Samsung.

As earnings were released, the market reaction was notably volatile. SanDisk reported substantial beats on both EPS and revenue, with fourth quarter revenue of $8.97 billion (up 372% year-over-year) and non-GAAP EPS of $39.25 (up 13,000% year-over-year). Gross margins reached 84.6%, exceeding guidance, and the company highlighted its transformation through technology leadership, operational excellence, and the establishment of data center as a core growth pillar.

SanDisk also detailed its new business models (NBMs), which involve long-term, financially guaranteed contracts with key customers, now representing over $90 billion in minimum revenue commitments through 2028. These agreements are designed to provide visibility, durability, and protection against demand fluctuations, with more than half of 2027 supply already committed.

Despite these robust results, SanDisk's stock fell sharply after hours, at one point down 10%, before partially recovering. The panel attributed this to a combination of profit-taking after a massive run-up (over 460% year-to-date), high expectations, and lingering concerns about the durability of the memory cycle. Western Digital, which also posted a double beat, saw its stock decline due to a perceived lack of 'blowout' numbers compared to previous quarters.

The market's reaction suggested that even strong beats were not enough to satisfy investors in a sector where cyclicality and the risk of oversupply remain top of mind.

Other companies experienced similar volatility. Duolingo initially surged on an 8% EPS beat and 1% revenue beat but quickly reversed, ending down after hours. Figma delivered a 100% EPS beat and 50% revenue growth, yet also fell sharply after an initial rally, possibly due to concerns over stock-based compensation and competitive pressures from Anthropic.

ELF posted a 143% EPS beat and 11% revenue beat but declined, highlighting the market's unforgiving stance. AppLovin, despite 53% year-over-year revenue growth, dropped over 20%, likely due to missing 'whisper' numbers and high expectations. Fastly and Soundhound were among the few tech names to hold gains, with Fastly raising guidance significantly and Soundhound beating EPS by 23%.

The SanDisk earnings call provided further insight into the company's strategy. Management emphasized the structural shift in the memory market driven by AI inference workloads, which require massive, scalable storage solutions. SanDisk's technology roadmap, including advances in TLC and QLC NAND, high bandwidth flash, and end-to-end integration, was presented as a key competitive advantage.

The company is prioritizing nodal transitions over wafer additions to drive supply growth efficiently, aiming for mid to high teens bit growth with declining capital intensity. The NBMs were described as transformative, offering four years of visibility and aligning incentives between SanDisk and its largest customers through financial guarantees and detailed supply-demand agreements.

Analysts' questions focused on the sustainability of margins, the risk of a cyclical downturn, and the efficacy of buybacks as a capital allocation strategy. SanDisk management reiterated confidence in maintaining high gross margins (around 80% for NBMs), robust free cash flow, and consistent buybacks, with $14 billion newly authorized. However, they acknowledged that the memory business remains inherently cyclical, and while long-term agreements provide some insulation, the risk of oversupply and price normalization in 2027-2028 looms large.

The panel debated whether buybacks could meaningfully support valuations in a downturn, noting that while they increase per-share earnings, they do not address the fundamental risk of margin compression if supply outpaces demand.

Broader market context added to the uncertainty. AI and SaaS stocks, which had rallied on strong growth narratives, faced sharp reversals after hours, with only a handful of names like Chime and Soundhound holding gains. The panel noted that the market appears to be pricing in a peak or imminent slowdown in the memory cycle, as evidenced by low forward P/E multiples for SanDisk and Micron despite explosive earnings growth.

Comparisons were drawn to Nvidia, which commands a premium due to its unique competitive position, whereas memory suppliers are viewed as more commoditized and vulnerable to new entrants or shifts in supply chains, especially if geopolitical factors allow for increased sourcing from Chinese manufacturers.

The discussion also touched on the strategic importance of long-term agreements (LTAs) in reducing volatility and aligning supplier-customer interests, with the risk of LTA breaches seen as low given the multigenerational nature of hyperscaler relationships. However, the panel remained cautious, emphasizing that the market will continue to scrutinize signs of oversupply, margin durability, and the sustainability of AI-driven demand. The session concluded with a preview of upcoming earnings and a reflection on the unpredictable, sentiment-driven nature of current market reactions, where even flawless execution is no guarantee of positive stock performance.

LINKS

• Amit Kukreja's Twitter/X profile for real-time market commentary.
• Amit Kukreja's Substack for in-depth stock and business analysis.
• Free news terminal for financial and market news aggregation.

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