Sandisk Corporation (SNDK) | The Buildout — AI Infrastructure
The Verdict
Sandisk designs and manufactures NAND flash storage devices and the enterprise SSDs used to store and serve data in AI data centers. It designs its own NAND die and controllers, builds wafers through joint ventures, and handles assembly and test. In the AI infrastructure buildout, its storage sits between compute and the data that inference workloads generate, making it a direct supplier to datacenter and cloud storage systems.
| Market Cap | — |
| Revenue (TTM) | $13.2B |
| Revenue Growth | +82.8% |
| EBITDA Margin (TTM) | 42.1% |
| Net Cash | $3.5B |
| Earnings Beats | 6 of 6 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- FQ4 FY26 revenue was $8,965 million, up 51% sequentially and 372% year over year.
- The ten NBM agreements carry a minimum expected revenue of $93.9 billion, with $59.8 billion RPO and $16.5 billion customer guarantees; more than 50% of FY27 bits are committed.
- Datacenter bits rose from about 12% of the mix a year ago to 38% exiting FY26, while FY26 Datacenter revenue grew 437%.
- Non-GAAP gross margin reached 84.6% in FQ4 FY26, up from 26.4% a year earlier, and adjusted free cash flow was $5,035 million at a 56% margin.
- Capital returns expanded: $4.5 billion repurchased in FQ4 FY26 and $15.5 billion of buyback authorization remains.
What We’re Watching
- NBM counterparty risk: customer guarantees of $16.5 billion are released toward contract ends, and the agreements depend on unnamed large customers performing.
- Kioxia supplies substantially all flash wafers from the joint ventures and is also a named competitor.
- Consumer revenue fell 32% sequentially in FQ4 FY26 to $556 million; management calls it a pricing/volume equilibrium adjustment, but the new level is not yet clear.
- PC and smartphone units are expected down mid-teens in calendar 2026, with Edge recovery not forecast until calendar 2027.
The disclosed record shows the structural-change thesis strengthening: committed NBM economics scaled from five agreements to ten, RPO and guarantees rose sharply, and results beat guidance. It remains unproven through a full NAND pricing downcycle. The open question is whether the ten multiyear customers perform and whether floor pricing holds if spot NAND prices normalize.
Earnings Beat
In FQ4 FY26, Sandisk reported revenue of $8,965 million, up 51% sequentially and 372% year over year. Non-GAAP gross margin was 84.6%, up from 78.4% in FQ3 FY26 and 26.4% a year earlier. Datacenter revenue was $2,977 million, up 103% sequentially, while Consumer fell 32% sequentially to $556 million.
| Metric | Q3 FY2026 | Q2 FY2026 | Q3 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $6.0B | $3.0B | $1.7B | +251.0% |
| Gross margin | 78.4% | 50.9% | 22.5% | +5590bps |
| EBITDA | $4.1B | $1.1B | −$5M | −83080.0% |
| EPS | $23.03 | $5.15 | $-13.33 | −272.7% |
| NBM remaining performance obligation | $59.8B | $41.6B | n/a | — |
| Datacenter revenue | $2,977M | $1,467M | n/a | — |
A year ago, we were talking about visibility in this business of 3 months. And now we’re talking over 4 years of committed financials…— David Goeckeler, August 5, 2026
Management tone: Management shifted from cautious in FQ2 FY26 to confident in FQ3 FY26 and to a highly confident structural-regime narrative by FQ4 FY26. It substantiated the shift with RPO, guarantees, and committed-bit figures, and was direct on KV-cache sizing and an OpEx benefit while deflecting or deferring on pricing ceilings and HBF timing.
Management Guidance
For FQ1 FY27, management guided revenue of $10.3 billion to $10.8 billion, non-GAAP gross margin of 83% to 85%, non-GAAP OpEx of $520 million to $540 million, and non-GAAP EPS of $44 to $46, assuming 155 million fully diluted shares. Sequential growth is expected from both bit growth and modest price increases. Full-year FY27 sellable bit growth is guided to mid-teens, below the long-term mid-to-high-teens target, because management is deliberately holding higher inventory to support NBMs and component costs; capex is expected around 6% of full-year revenue.
Trajectory
Revenue moved from $3,025 million in FQ2 FY26 to $5,950 million in FQ3 FY26 and $8,965 million in FQ4 FY26, while non-GAAP gross margin expanded from 51.1% to 78.4% to 84.6%. Management said FQ4 sequential revenue growth was roughly one-third volume and two-thirds pricing, and the 10-Q attributed gross margin gains to higher ASP and higher exabytes sold. The next guide of 83% to 85% gross margin is the first sequential guide not clearly above the just-reported level, as mix and component cost assumptions tighten.
The Model
The model projects FY+1 revenue of $40,000 million and EBITDA of $28,560 million, a 71.4% EBITDA margin. For FY+2, it projects revenue of $48,000 million and EBITDA of $34,032 million, a 70.9% EBITDA margin. The projection set publishes revenue and EBITDA only.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $7.4B | $40.0B | $48.0B |
| YoY Growth | — | +443.8% | +20.0% |
| EBITDA | $647M | $28.6B | $34.0B |
| EBITDA Margin | 8.8% | 71.4% | 70.9% |
Projections are the median of 5 independent model runs.
For FQ1 FY27, management guided revenue of $10.3 billion to $10.8 billion, non-GAAP gross margin of 83% to 85%, non-GAAP OpEx of $520 million to $540 million, and non-GAAP EPS of $44 to $46, assuming 155 million fully diluted shares. Sequential growth is expected from both bit growth and modest price increases. Full-year FY27 sellable bit growth is guided to mid-teens, below the long-term mid-to-high-teens target, because management is deliberately holding higher inventory to support NBMs and component costs; capex is expected around 6% of full-year revenue.
What Could Go Right — and Wrong
- Additional NBM signings or expansions raise the share of committed bits beyond the more than 50% already committed for FY27.
- PCIe Gen 5 TLC enterprise SSDs qualify at additional hyperscalers over the coming quarters.
- Stargate QLC ramps to sustained revenue with the two major hyperscalers management has described.
- High-bandwidth flash moves from pre-revenue to samples, ship dates, and customer adoption.
- Edge returns to exabyte growth in calendar 2027 as PC and smartphone units stabilize and content per device increases.
- A large NBM customer breaches, renegotiates, or uses guarantee release late in a contract; the model depends on multiyear customer performance.
- NAND industry supply responds faster than management's allocation-beyond-calendar-2027 timeline, normalizing prices.
- Consumer revenue continues its step-down from $556 million and fails to find a stable pricing/volume equilibrium.
- PC and smartphone unit declines extend beyond calendar 2026, delaying the expected Edge recovery.
- BiCS 8, BiCS 10, or Stargate execution stalls, limiting bit growth, cost, or enterprise SSD qualification.
Looking Ahead
Over the next twelve months, the key forward indicators are the quarterly RPO and contract-liability disclosures, the pace of additional NBM signings, and the qualification and ramp milestones for PCIe Gen 5 TLC and Stargate QLC. Management also expects Edge to return to growth in calendar 2027 and has said bits remain on allocation beyond calendar 2027.
- Next week from Aug 5, 2026Investor Day in New York — Tests NBM economics, HBF, BiCS 10, and the long-term model.
- QuarterlyRPO and contract-liability update — Tests NBM conversion and customer prepayments or deposits.
- OngoingAdditional NBM signings or expansions — Could raise committed-bit percentages and total RPO.
- Over the coming quartersPCIe Gen 5 TLC hyperscaler qualifications — Could widen the enterprise SSD customer base.
- FY27BiCS 10 production ramp — Tests density, power, and performance milestones.
- Calendar 2027Edge market recovery expected — Tests PC and smartphone unit stabilization plus content growth.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $6.7B | $7.4B | $13.2B | +10.4% |
| Gross Margin | 15.2% | 29.9% | 56.1% | +1,472bps |
| EBITDA | −$244M | $647M | $5.9B | +365.2% |
| EBITDA Margin | -3.7% | 8.8% | 42.1% | +1,246bps |
| Net Income | −$672M | −$1.6B | $4.5B | -144.2% |
| Free Cash Flow | −$323M | $78M | $4.2B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)56.1%
- EBITDA Margin (TTM)42.1%
- Net Margin (TTM)34.2%
- ROIC41.6%
- FCF Conversion80.4%
- SBC / Revenue1.6%
The Company
Sandisk develops, manufactures, and provides NAND flash storage devices and solutions across three end markets: Cloud/Datacenter, Edge/Client, and Consumer. In Cloud/Datacenter, its products include PCIe Gen 5 compute-focused TLC enterprise SSDs and QLC Stargate storage-class SSDs aimed at high-capacity AI data lakes. Management ties the storage demand directly to inference: every AI interaction creates content that must be stored, retrieved, and served at low latency.
Sandisk manages the value chain from NAND die design through front-end wafer manufacturing in Flash Ventures joint ventures with Kioxia at Yokkaichi and Kitakami, Japan, plus an owned Penang, Malaysia facility for flash R&D and media manufacturing. It also designs controllers and handles back-end assembly and test. Substantially all flash wafers come from the Kioxia joint ventures, making the company highly integrated and highly dependent on a partner that is also a competitor.
Business Segments
Competitive Landscape
The 10-K names Kioxia, Micron, Samsung, SK Hynix, Yangtze Memory Technologies, and smaller assemblers as competitors. A key competitive condition is that Sandisk's main wafer supplier, Kioxia, is also in that competitor list.
- KioxiaSandisk's 10-K states substantially all flash wafers come from the Kioxia joint ventures; Kioxia is also named a competitor.
- MicronNamed in the 10-K as a competitor; a Source 1 neighbor read-through reports Micron NAND revenue of $9.9B, up 99% sequentially, with 16 strategic agreements covering about 30% of NAND volume.
- SamsungNamed in the 10-K as a competitor; not discussed in the supplied source material.
- SK HynixNamed in the 10-K as a competitor; management was asked about a possible HBF global standard with SK Hynix and deferred details to Investor Day 'next week.'
- Yangtze Memory TechnologiesNamed in the 10-K as a competitor; not discussed in the supplied source material.
Supply Chain
Sandisk sits between NAND wafer supply and AI system storage: it sources wafers through Kioxia, adds controllers and assembly/test, and sells enterprise, edge, and consumer storage devices. No neighbor transcript in the source names Sandisk by name.
More on SNDK: Earnings recap