SanDisk targets 80% gross margin as AI memory demand surges

SanDisk guided to mid-to-high double-digit revenue growth for fiscal 2028-2030, with non-GAAP gross margin of about 80% and operating margin of about 75%.

"The datacenter represents a fundamental inflection point for the company," CEO David Goeckeler said, as segment revenue climbed from $269 million to nearly $3 billion in a single fiscal year.

The targets extend a record fiscal 2026, when SanDisk posted fourth-quarter non-GAAP gross margin of 84.6%, up from 26.4% a year earlier, and non-GAAP operating margin of 79.2%. Quarterly revenue jumped 371.6% year over year to $8.965 billion, with non-GAAP EPS of $39.25 beating consensus of $33.28 by 17.94%. The board authorized an additional $14 billion buyback on a balance sheet with zero long-term debt.

The margin targets point to pricing power in a NAND market where Samsung, SK Hynix and Micron have sold out 2027 supply, according to a report. Samsung held the top NAND market share spot in the second quarter, with SK Hynix ranked second, Counterpoint data shows. Semiconductor billings grew 134% year over year in June, led by memory chips, Wells Fargo data shows. SanDisk shares, up 2,879% over the past year, trade at $1,212.21 after a 30% pullback from June's peak, with a market value of $177 billion versus Micron's $991 billion.

For the first quarter of fiscal 2027, SanDisk expects revenue of $10.3 billion to $10.8 billion, non-GAAP EPS of $44 to $46 and non-GAAP gross margin of 83% to 85%. Its fourth-quarter gross margin of 84.6% far outpaced Western Digital's 54.4%, its former parent, and Micron's memory business.

The 30% drawdown from June's peak coincided with the fiscal fourth-quarter report on Aug. 5, when investors locked in gains on a record quarter. Wall Street consensus sits at $2,116.64, and 24/7 Wall St. sets a price target of $1,882.90, implying about 55% upside from current levels.

SanDisk's datacenter segment revenue grew 437% for the full fiscal year, and management flagged an emerging Key Value Cache opportunity that could add 75 to 100 additional exabytes of 2027 demand not baked into guidance. Goeckeler signed five additional New Business Model agreements since April, deepening customer commitments. The company relies on its Kioxia joint venture for NAND production, and adjusted free cash flow totaled $5.04 billion in the fourth quarter.

The guidance implies SanDisk expects AI-driven memory demand to keep pricing elevated through the decade. Investors will watch the fiscal 2027 first-quarter report for updated segment margins and any expansion of the Key Value Cache opportunity.

This article is for informational purposes only and does not constitute investment advice.