SSD and NAND flash prices have surged over the past several quarters, and consumers buying storage for PCs and smartphones are starting to feel the ripple effects. The epicenter is said to be the explosive growth in demand from AI data centers, but no one can say for certain how long this boom will last. Against this backdrop, SanDisk posted record numbers in its FY26 Q4 earnings, announced on August 5, 2026: revenue of $8.965 billion (up 372% year-over-year) and a gross margin of 84.6%.
And yet, the stock had already fallen 5.5% during regular trading on August 5, before earnings were even released. When results came out after market close, the stock fell another 3.5% in after-hours trading, bringing the combined decline to roughly 9%. Behind this contrast between record-breaking results and a sinking stock price lies a new business practice called NBM (a multi-year fixed-price contract) and lingering doubts about the sustainability of demand that even that scheme cannot fully dispel.
Revenue Up 372%, Gross Margin at 84.6%: A Full-Year Recovery
SanDisk spun off from Western Digital on February 21, 2025, and began trading independently on Nasdaq on February 24. In its FY26 Q4 earnings (covering the period from April 4 to July 3, 2026), announced on August 5, 2026, SanDisk reported revenue of $8.965 billion, up 372% from $1.901 billion in the same period a year earlier. That's also a 51% increase quarter-over-quarter. Both GAAP and non-GAAP gross margins reached 84.6%, up 6.2 points from 78.4% in the previous quarter and up 58.4 points from 26.2% a year earlier.
GAAP net income came to $6.903 billion, up 91% from $3.615 billion in the prior quarter. A year earlier, the company had posted a net loss of $23 million, meaning it turned around from a loss to a massive profit within a single year. GAAP diluted EPS was $43.97 (compared to -$0.16 a year earlier), and non-GAAP diluted EPS was $39.25, beating analyst estimates that ranged from roughly $34.59 to $34.96. That's a beat of more than 12% even against the top of the estimate range—not a marginal overshoot.
Data center revenue came in at $2.977 billion, up 103% quarter-over-quarter and up 1,298% from $213 million a year earlier. However, that year-over-year figure is inflated by a small base, and the 103% quarter-over-quarter growth arguably reflects the underlying business trend more honestly. The Edge segment (covering PCs, smartphones, and similar devices) grew to $5.432 billion, up 48% quarter-over-quarter, while the Consumer segment (retail SSDs, USB drives, etc.) fell to $556 million, down 32% quarter-over-quarter—a clear divergence between segments.
For full-year FY26, revenue reached $20.248 billion, up 175% from $7.355 billion in the prior year, with gross margin improving to 71.5% on a GAAP basis and 71.6% on a non-GAAP basis (compared to roughly 30% the prior year). SanDisk Chairman and CEO David Goeckeler said, "We closed fiscal year 2026 with a leading technology portfolio, established data center as a key growth pillar, and deepened our customer partnerships." Given that just a year earlier, in full-year FY2025, the company had posted a GAAP net loss of $1.641 billion, these numbers underscore an industry structure in which the volatility of NAND market conditions translates directly into volatility in financial results.
Along with the strong earnings, the company also turned more aggressive on shareholder returns. SanDisk increased its share buyback authorization by $14 billion, bringing the remaining authorization to $15.5 billion. Total buybacks executed in FY26 amounted to $4.524 billion—a notable increase in returns to shareholders even during a period of transition from losses to profits, which can be read as a sign that management has some confidence in the sustainability of these results. The remaining $15.5 billion authorization is more than three times the amount executed in FY26, effectively securing capacity for shareholder returns across multiple future quarters.
Why the Stock Fell Despite Strong Earnings
Despite numbers that were, by any measure, excellent, SNDK shares had already fallen 5.5% during regular trading on August 5—before the earnings release. Once results came out after market close, the stock dropped another 3.5% in after-hours trading, falling below $1,300. The combined decline of roughly 9% is unusually large given the record-breaking results. A growing view attributes this to concerns over the sustainability of AI-related investment—so-called "AI bubble" fears.
Looking at the stock's trajectory, this decline can also be read as something that didn't begin suddenly. SanDisk shares had surged 574% in 2026 up to the August 4 closing price of $1,427.62, but the 52-week high was $2,354.39, set on June 22—meaning the stock had already fallen nearly 40% from its high even before earnings were announced. The pre-earnings 5.5% drop may simply have carried over from a correction phase that had already begun following the year's sharp rally.
During its earnings call, SanDisk explained that of the quarter-over-quarter revenue increase, roughly one-third came from higher shipment volumes and roughly two-thirds from price increases. However, the company did not disclose what portion of that volume increase came from actual demand from AI data centers. Without that breakdown, outside observers cannot determine whether AI investment represents a temporary capital-spending boom or sustained demand growth—and investor concerns remain unresolved as a result.
For now, the only material available to fill this gap is next quarter's numbers. As the proportion of NBM contracts rises, part of revenue becomes decoupled from market fluctuations, making the growth rate of the remaining portion a key gauge going forward. Using this quarter's breakdown—48% growth in Edge and 103% growth in data center—as a baseline, tracking which segment slows in the next quarter will serve as a practical yardstick for interpreting future earnings. If Edge growth alone slows while data center growth remains high, that would make the company's dependence on AI infrastructure investment even clearer.
How the NBM Fixed-Price Contract Scheme Works
The multi-year contracts that SanDisk calls its "New Business Model," or NBM, had reached a cumulative total of 10 as of the earnings announcement. From 3 contracts at the end of the previous quarter, the company added 5 during Q4 to reach 8, and then added 2 more in the period leading up to the earnings release—meaning 2 of the 10 were signed after the close of Q4. These contracts run for 3 to 5 years and combine fixed and variable pricing within a range bounded by a floor and a ceiling, marking a departure from the industry's traditional practice of letting spot prices govern the entire revenue stream.
NAND flash has historically been a commodity product whose prices swing by multiples depending on market conditions, and manufacturers have taken direct hits when demand softened and prices collapsed. NBM is a scheme that locks in a floor price through contract, ensuring a certain level of revenue even when market conditions deteriorate. The flip side is that SanDisk also promises major customers a price ceiling when conditions tighten, making it a contract in which both sides share the risk of sudden swings.
CFO Luis Visoso reportedly said during the earnings call, "The total revenue we expect from all signed NBM contracts, assuming floor pricing, comes to a minimum of $93.9 billion. We believe actual revenue will exceed this minimum." Comparing this $93.9 billion figure to FY26 full-year revenue of $20.248 billion yields a ratio of about 4.6x ($93.9 billion ÷ $20.248 billion). In other words, SanDisk has already locked in, through multi-year contracts, an amount exceeding four times its most recent full year of revenue. This means the company has built a revenue floor that will hold firm no matter how wildly NAND market conditions swing.
There are some discrepancies in the number of contracts reported across different sources, but these stem from timing differences—8 contracts as of the end of the previous quarter versus 10 as of the earnings release. The company has not disclosed further details, including the names of the counterparties, so it's impossible for outside observers to verify which customers have committed to what scale of contracts.
If we simply take the midpoint of FY27 Q1 revenue guidance—$10.55 billion—and multiply it by four to annualize it, we get an implied annual revenue scale of roughly $42.2 billion. Even measured against this higher, growth-adjusted revenue level, the $93.9 billion figure equates to roughly 2.2 years' worth of revenue—meaning it still represents a substantial cushion that holds even after factoring in expected growth. Since NBM contracts run 3 to 5 years, this cushion isn't a one-time figure but something that will remain in effect throughout the life of the contracts.
Five Major NAND Makers Post Record Results in Unison
Entering 2026, all five major NAND manufacturers have posted record-breaking results in tandem—this isn't a phenomenon unique to SanDisk. The industry as a whole appears to be in what could be called a "memory supercycle." Laying out each company's quarterly announcements side by side shows that price increases and demand expansion are occurring simultaneously across the entire industry.
| Company | Key Figures from Most Recent Quarter |
|---|---|
| Samsung Electronics | 2026 Q2: Device Solutions (semiconductor) division revenue up 56% quarter-over-quarter, with the memory business driving the division's growth |
| SK hynix | 2026 Q2: NAND average selling price (ASP) up in the mid-50% range quarter-over-quarter; operating margin at a record 76% |
| Micron | FY26 Q3 (ended May 28): NAND flash division revenue of $9.9 billion, a quarterly record, up 361% year-over-year; prices up in the mid-80% range quarter-over-quarter |
| Kioxia | FY2026 Q1 (June-ending quarter): Revenue up 76% quarter-over-quarter; GAAP operating profit up 113% quarter-over-quarter (up 121% on a non-GAAP basis), a record high. In May, the company announced plans for a U.S. ADR listing |
Each company's fiscal quarters don't align. Samsung and SK hynix report on a calendar-year basis for 2026 Q2, Micron's FY26 Q3 ended May 28, and Kioxia's FY2026 Q1 covers the period ending in June—so a simple side-by-side comparison isn't possible. Still, accounting for these timing differences, one common thread stands out: price increases and demand growth are happening at the same time across all these companies. Kioxia's planned ADR listing appears aimed at extending to U.S. investors the momentum behind its stock, which is reported to have surged more than 800% in the Japanese market.
What SanDisk and the other four companies share is that explosive demand growth for AI data center SSDs and memory is occurring simultaneously with supply tightness. Major customers who managed to sign NBM contracts are also beneficiaries in the sense that the price ceiling shields them from the full impact of price spikes. Meanwhile, the floor guarantees SanDisk's own revenue and profitability, ensuring a certain level of earnings even if market conditions worsen.
On the other hand, the burden is falling on ordinary consumers. SanDisk's Consumer segment revenue fell 32% quarter-over-quarter and 5% year-over-year. Beyond declining demand, rising NAND prices are pushing up retail prices for PCs, smartphones, and external SSDs, which may also be discouraging consumers from purchasing. Smaller storage device makers who can't secure fixed-price contracts are left with no choice but to pass rising input costs directly on to consumers. The impact reaches Japanese consumers as well, as rising NAND prices can spill over into the prices of PCs and SSDs sold domestically.
Yokkaichi and Kitakami: The Heart of NAND Production, Located in Japan
SanDisk relies almost entirely on joint-venture fabs with Kioxia for its NAND production, with facilities located in Yokkaichi, Mie Prefecture, and Kitakami, Iwate Prefecture. On January 29, 2026, the two companies announced they would extend this joint-venture arrangement through December 31, 2034. In effect, the production base underpinning the AI boom's NAND flash supply is located in Japan.
Along with the extension, SanDisk will pay Kioxia $1.165 billion in manufacturing service fees, in installments, from 2026 through 2029. At an exchange rate of roughly ¥156 to the dollar (as of early August 2026), that amounts to roughly ¥181.7 billion. Behind the quarterly record-breaking earnings lies a massive investment decision tied to a factory located in Japan.
Production capacity is also expanding. On July 2, 2026, the Kitakami fab's Fab2 (K2) facility announced the start of production for 10th-generation 3D NAND flash products. It is the manufacturing lines in Yokkaichi and Kitakami that actually sustain the robust demand from AI data centers. The 2034 contract extension underscores the fact that production is anchored in Japan.
Combined Edge and data center segment revenue reached $8.409 billion, and at the starting point of this supply chain is wafer production in Yokkaichi and Kitakami. For Kioxia, which handles the manufacturing, the joint venture with SanDisk represents a core business as well, and the extension through 2034 serves to lock in a long-term demand outlook for both companies.
FY27 Guidance and the Sustainability of the NAND Boom
For FY27 Q1, SanDisk guided for revenue of $10.3 billion to $10.8 billion and non-GAAP diluted EPS of $44.00 to $46.00. Non-GAAP gross margin guidance came in at 83.0% to 85.0%, roughly in line with the 84.6% actually achieved in Q4. If realized, this would mean further revenue and profit growth—suggesting that, contrary to the market's apparent worries, management is baking in continued strength. There's a clear disconnect between the market's reaction—a 9% stock drop on August 5—and the bullish outlook management laid out, and that gap will face its first real test when FY27 Q1 results are reported around November 2026.
Past boom cycles in the memory industry—whether the DRAM price surge of 2017–2018 or the NAND market expansion around 2021—have historically reversed course within just a few quarters. What sets this cycle apart is the new inclusion of multi-year NBM contracts, which are designed to absorb sharp price declines to some degree. Goeckeler also said during the earnings announcement, "Our technology and products position us well to create value for our customers and generate sustained, growing free cash flow." That statement will be put to the test in the FY27 quarterly results, when the real question becomes whether the company can sustain its growth rate even as the share of NBM contracts continues to rise.