Sandisk Just Announced a $14 Billion Stock Buyback Authorization: Warren Buffett Has a Warning Investors Shouldn't Ignore

Sandisk (NASDAQ: SNDK) has been the best-performing stock in the S&P 500 so far in 2026. The memory maker has seen demand for its chips soar as AI infrastructure spending escalates. The resulting shortage has enabled the company and its peers to impose significant price increases and achieve tremendous profitability.

Management now plans to return some more of those profits to shareholders. When it delivered its fiscal fourth-quarter earnings results at the beginning of August, it also announced a $14 billion addition to its share-repurchase authorization. That brings its total remaining authorization to $15.5 billion, which is more than 7% of the company's market cap as of this writing. Buying back shares of a stock gives the remaining shareholders a larger stake in the business's future earnings.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »

But not all stock buybacks are great for investors over the long run. Warren Buffett has frequently shared a warning regarding share repurchases that Sandisk investors shouldn't ignore.

Warren Buffett loves companies that return cash to shareholders either through dividends or stock repurchases. He has often mentioned the value of share repurchases for existing shareholders throughout the annual letters he wrote to Berkshire Hathaway shareholders during his tenure as CEO.

But Buffett has a big caveat about stock buybacks: "All stock repurchases should be price-dependent. What is sensible at a discount to business-value becomes stupid if done at a premium," he wrote in his 2023 letter to shareholders.

Berkshire Hathaway adopted a new share-repurchase policy in 2018 that allowed Buffett and his vice chairman, Charlie Munger , to buy back as many Berkshire Hathaway shares as they wanted, with only a few limitations. The biggest of those is that they could only buy when the stock was trading below its intrinsic value, as conservatively determined by the two of them. The repurchase authorization remains in effect today, with the intrinsic value determined by CEO Greg Abel and Buffett, who now serves only as chairman of the board.

The year of the repurchase authorization change, Buffett wrote, "Blindly buying an overpriced stock is value-destructive, a fact lost on many promotional or ever-optimistic CEOs." And this is the warning Sandisk investors should heed.