Sandisk outlines $4.4B–$4.8B Q3 revenue target and projects structurally higher margins amid AI-driven NAND demand
Jan. 30, 2026 2:53 AM ET Sandisk Corporation (SNDK) StockAI-Generated Earnings Calls Insights
Earnings Call Insights: Sandisk Corporation (SNDK) Q2 2026
Management View - CEO David V. Goeckeler stated revenue was $3 billion, up 31% sequentially, with non-GAAP earnings per share of $6.20. He commented, "Artificial intelligence continues to drive a step change in demand with data center and edge workloads expanding system complexity and storage content requirements." Goeckeler emphasized that NAND is now indispensable to global storage needs, leading to evolving commercial relationships with customers and a push toward multiyear agreements to secure supply and pricing certainty.
- Goeckeler indicated major product milestones, including the qualification of PCIe Gen5 high-performance TLC drives at a second hyperscaler and progress toward additional hyperscaler qualifications. He noted, "Our BiCS8 QLC storage class product, codenamed Stargate, continues advancing through qualification with 2 major hyperscalers and is expected to begin shipping for revenue within the next several quarters."
- In the consumer segment, Goeckeler highlighted the launch of the Sandisk Extreme Fit USB-C flash drive and expanded licensing with Crayola and FIFA. He also mentioned the rebranding of WD_BLACK and WD Blue NVMe SSDs under the Sandisk Optimus lineup.
- CFO Luis Visoso explained, "We believe that the NAND market is going through structural evolution catalyzed by AI...should reduce cyclicality of our NAND business, creating higher average long-term margins and returns." He reported revenue of $3,025 million, exceeding guidance, and strong sequential growth across all markets.
Outlook - For Q3, management guided revenue between $4.4 billion and $4.8 billion, forecasting a market "more undersupplied than it was in the second quarter." Non-GAAP gross margin is expected between 65% and 67%. Non-GAAP operating expenses are projected between $450 million and $470 million, with non-GAAP EPS forecast between $12 and $14, assuming 157 million fully diluted shares. "We expect bids to be down mid-single digits due to a lower-than historical seasonality as we benefit from accelerating strength in data center," Visoso said.
- The supply-demand environment is described as requiring "careful allocation planning and alignment with our customers," with ongoing focus on disciplined execution through the BiCS8 transition.
Financial Results - Revenue for the second quarter was $3,025 million, up 31% quarter-over-quarter and 61% year-over-year, surpassing the previous guidance range. Edge revenue reached $1,678 million, consumer $907 million, and data center $440 million, with data center up 64% sequentially.
- Non-GAAP gross margin was 51.1%, compared to 29.9% in the prior quarter. Non-GAAP operating margin rose to 37.5% from 10.6%. Non-GAAP EPS was $6.20, up from $1.22. The quarter included $24 million in start-up costs and a non-GAAP operating expense of $413 million, which benefited from a nonrecurring item related to product introductions.
- The company ended the quarter with $1,539 million in cash and $603 million in debt, having paid down $750 million during the quarter. Adjusted free cash flow was $843 million, representing a 27.9% margin. Sandisk also announced an extension of its JV with Kioxia to 2034, involving $1,165 million in payments over 2026–2029.
Q&A - Mark Newman, Bernstein: Asked about long-term agreements and supply-demand balance. Goeckeler responded, "There's a number of things happening in the dynamics of our business that are contributing to the results you're seeing...We're investing billions of dollars of CapEx...we're going to drive mid-teens to high-teens bit growth on a sustained basis." Visoso added, "We're making significant progress with several of our customers who really want us to prioritize or assure supply."
- Joseph Moore, Morgan Stanley: Inquired about key value cache and data center NAND demand. Goeckeler replied, "Our initial looks at it...for '27 demand, we think that's roughly maybe 75 to 100 additional exabytes. And then a year after that, you can double that."
- Christopher Muse, Cantor Fitzgerald: Asked about incremental AI-driven NAND demand and capital return. Goeckeler said, "We're now looking at high-60s exabyte growth in data center as our forecast." Visoso replied, "Our priority is to continue to invest in the business...and to build prudent cash reserve."
- James Schneider, Goldman Sachs: Questioned factory utilization and future expansion. Goeckeler stated, "We haven't had any underutilization in the fab for a couple of quarters now...Kitakami is where we're expanding."
- Mehdi Hosseini, Susquehanna: Asked about ASP mix and urgency for multiyear contracts. Visoso said, "We're driving a better mix...partnering with those customers that value our relationship." Goeckeler observed, "I do think that customers are starting to look further down the horizon especially on the data center."
Sentiment Analysis - Analysts expressed positive sentiment, repeatedly congratulating management and focusing on growth in AI, robust guidance, and the pace of industry change.
- Management maintained a confident tone in prepared remarks, frequently citing strong demand, disciplined execution, and industry leadership. During Q&A, management was transparent and detailed, yet emphasized caution and discipline regarding capital allocation and customer agreements.
- Compared to the previous quarter, both analysts and management displayed heightened optimism, with analysts increasingly focused on AI-driven demand and long-term agreements.
Quarter-over-Quarter Comparison - Guidance for Q3 revenue and margins was significantly higher than the previous quarter's outlook, reflecting improved market conditions and stronger-than-expected pricing.
- The company shifted from discussing nascent long-term agreements to confirming that at least one agreement had been signed, with others in progress.
- Data center revenue growth accelerated sharply, and management highlighted the transition of data center to the largest NAND market for 2026.
- Management's confidence was more pronounced, citing structurally higher margins and returns, with analysts echoing increased optimism and focus on AI as a transformative market driver.
Risks and Concerns - Management acknowledged that demand continues to exceed supply, necessitating "careful allocation planning and alignment with our customers."
- Visoso noted, "Any material increase in capital deployment would require high confidence that demand at attractive pricing levels is durable over a several year horizon with financial commitments."
- The company is exposed to risks related to the timing and terms of long-term agreements, and the need for ongoing innovation and capital investment was cited as a continuous requirement.
Final Takeaway Sandisk reported substantial sequential growth in revenue and profitability, driven by AI-fueled demand across data center, edge, and consumer markets. Management outlined a structurally higher margin and return profile for the NAND business, supported by disciplined capacity planning, supply agreements, and continued innovation. The company set an ambitious Q3 guidance, underscoring confidence in sustained demand and highlighting its strategic position as NAND becomes central to AI infrastructure globally.
Read the full Earnings Call Transcript
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