flash
This is getting ludicrous. Sandisk’s profit in its latest quarter was greater then the previous quarter's revenues and its full fy2026 profit was larger than fy2025’s revenues; such is the pace of NAND price rises in a market dominated by 3 suppliers with persistent under-supply and sustained high, AI-fuelled, demand.
Record revenues of $8.97 billion in its fourth fiscal 2026 quarter, ended July 3, convincingly beat its $8.25 billion outlook, were up 372 percent Y/Y, and an enormous 51 percent Q/Q. The $6.9 billion GAAP net income beat last quarter’s $5.6 billion revenues and contrast with the year-ago $23 million loss. The full fy2026 revenue number was $20.25 billion, 175 percent higher annually, with a net income of $11.4 billion, more than fy2025’s $7.36 billion in revenues, and more than reversing fy2025’s $1.6 billion loss. NAND fab joint-venture partner Kioxia reported $11 billion in revenues in its most recent quarter, but its profits were lower at $5.3 billion..
Chairman and CEO David Goeckeler said in the earnings call: "We delivered record revenue, gross margin, and earnings per share, each above the high end of our guidance, and repurchased $4.5 billion of company stock. We are encouraged by this progress and believe the long-term earnings power, cash generation, and resilience of this business will become increasingly evident.”
CFO Luis Visoso, discussing the increased revenues, said: “About 1/3 of the growth came from incremental bits and 2/3 came from pricing.”
The company stated “fy2026 marks a fundamental inflection point for Sandisk, capping a year in which we reshaped the business toward the highest-value end markets, with Datacenter established as a major pillar of growth”
Financial summary
Gross margin: record 84.6% vs last quarter’s 78.4% vs prior quarter’s 51.1%
Operating cash flow: $7.1 billion vs $1.02 billion in prior quarter
Free cash flow: $5.0 billion vs prior quarter’s $2.96 billion
Cash & cash equivalents: $3.74 billion vs year-ago $1.5 billion .
Diluted EPS: record $43.97 vs last quarters $23.03 vs $5.15 in previous quarter
The three Sandisk market segment revenues were:
Data center: $2.98 billion, up 1,298% Y/Y
Edge: $5.43 billion, up 392%
Consumer: $556 million, down 5%
Data centre NAND/SSD sales are becoming a great growth driver, Sandisk stating “Datacenter is our fastest-growing end market and a central pillar of our long-term growth” and “Datacenter has grown from 12% of our bits in Q4'FY25 to 38% in Q4’FY26.” It expects “Datacenter's share of the total TAM to expand from ~30% in CY25 to ~50% in CY26, and to continue outpacing the market in CY27”
About its largest market, the Edge (smartphones, PCs, tablets and embedded drives), it is not so enthusiastic, saying that it, although not growing so fast, remains a large and strategically important end market. PCs and smartphones are working through a period of adjustment as demand shifts toward AI-enabled devices and premium configurations, driving higher storage content. This edge market should grow faster in calendar 2027.
The smaller consumer market “remains a meaningful differentiator within the industry, giving us a unique connection with end users and channel partners.”
Goeckeler said that the most important force in our market is “the era of inference. AI is fundamentally a memory-centric, storage-intensive problem, and it is reshaping the demand equation for NAND.” He pointed out: ”This demand is anchored in strategic long-term infrastructure investments by the world's largest technology companies, which are increasingly working with suppliers who can scale, partner with them, and secure supply that ensures performance and reliability years in advance.”
Sandisk has signed long-term agreements (LTAs), what it calls New Business Models (NBMs), 4 to 5 years in duration, guaranteeing supply and predictable pricing, with 8 customers in the datacenter and edge markets, including several of the largest hyperscalers in the world. There is $93.9 billion in minimum contracted NBM revenue at floor pricing and $16.5 billion in financial guarantees. These are intended to protect Sandisk if a customer fails to satisfy its purchase obligations under these agreements. Half of the NAND bits it produces are committed under NBMs in fiscal 2027, and approximately two thirds in fy2028.
Visoso said the gross margin in these deals was around 80 percent and “there is some upside. As prices continue to go up, we'll capture some of that upside as well.”
The NAND market should surpass $300 billion in calendar 2026, up3x Y/Y, with $500 billion in cy2027. The company sees the NAND market growing at an accelerated pace, with AI inference as a strong tailwind. It says “demand from our customers is growing faster than our supply, and we expect bits to remain on allocation beyond calendar 2027.”
Sandisk was at pains to emphasize demand durabiity, saying “Demand is anchored in strategic, long-term infrastructure investment by the world's largest technology companies, which increasingly work with suppliers who can scale and secure supply that ensures performance and reliability years in advance. Our NBMs (New Business Models) give customers confidence in long-term supply and give us clearer demand visibility and more durable cash flow.”
It aims to grow its NAND bit supply in at the mid to high teens percent level, and achieve that through NAND technology node transitions, not by adding fab capacity. Visoso said: “Our capital spending will increase year over year, primarily as we ramp BiCS8 nd BiCS10. Yet our investment relative to revenue will come down to approximately 6 percent for the full year.”
Next quarter’s revenue outlook is $10.55 +/- $250, and a 357 percent jump at the mid-point.
Bootnote
BiCS8 is 218 or 230 layer 3D NAND and BiCS10 is 332 layer 3D NAND.