Memory chip giant SanDisk Corp. (SNDK.US) is set to report its fiscal 2026 fourth-quarter and full-year results after the U.S. market close on Wednesday (August 5). The market is closely watching whether the momentum in NAND flash sales, profit margins, and earnings growth, previously driven by robust demand from artificial intelligence infrastructure, can be sustained.
This earnings report comes amid significant share price volatility for SanDisk. While the company has benefited from rising data center storage demand and constrained NAND supply, its stock suffered a sharp decline in July as investors reduced holdings in some of the year's top-performing memory chip stocks.
Guidance Points to Another Quarter of High Growth; Previous Quarter Set a High Bar
SanDisk officially forecast fourth-quarter revenue between $77.5 billion and $82.5 billion. At the midpoint of $80 billion, this represents a sequential increase of approximately 34% and a surge of over 320% compared to $19 billion in the same period of fiscal 2025. The company predicts non-GAAP diluted earnings per share for the fourth quarter to be between $30 and $33, compared to adjusted earnings of just $0.29 per share in the prior year period. Non-GAAP gross margin is expected to be between 79% and 81%.
Some market estimates are even higher than the company's official guidance. According to data from third-party earnings platforms, analysts currently expect average revenue of around $84.2 billion and adjusted earnings per share of approximately $34.67. This suggests investors may be hoping SanDisk will not only meet but also exceed the high end of its guidance. However, such high expectations also mean that even with a solid "report card," a conservative outlook for the new fiscal year could put downward pressure on the stock.
SanDisk's third fiscal quarter performance was exceptional: revenue reached $59.5 billion, up 97% sequentially and 251% year-over-year; adjusted earnings per share rose to $23.41; and GAAP net income hit $36.2 billion. Gross margin expanded to 78.4% during the quarter, up from 50.9% in the previous quarter and 22.5% in the prior year period. This significant improvement was primarily driven by higher NAND prices and a shift in product mix towards higher-value customers and markets.
By segment, third-quarter data center revenue was $14.7 billion, soaring 233% sequentially and 645% year-over-year. Edge business revenue surged 295% year-over-year to $36.6 billion. Consumer business revenue increased 44% year-over-year to $8.2 billion but fell 10% sequentially. In terms of cash flow, operating cash flow for the quarter was $30.4 billion, the company held $37.4 billion in cash at the end of the period, and it had fully repaid all long-term debt by the quarter's end.
NAND Pricing and Long-Term Contracts Key Variables; Market Expectations High After July's Drop
The immense demand for high-speed, durable storage from AI workloads has strongly supported sales of enterprise SSDs and high-end NAND products. SanDisk has fully benefited from this, while industry capacity constraints have further strengthened pricing power and margins. Investors will be closely watching whether data center revenue maintained its rapid expansion in the fourth quarter and if higher average selling prices continue to support exceptional gross margins. Additionally, management commentary on cloud service provider purchasing dynamics, enterprise SSD shipments, and progress on next-generation BiCS technology will be crucial for assessing the sustainability of current growth momentum.
Long-term customer agreements are another key focus. By the end of the third fiscal quarter, SanDisk had signed three long-term agreements under its new business model, adding two more in the fourth quarter. These multi-year arrangements include more substantial financial commitments, designed to improve revenue visibility and reduce the inherent cyclicality of the storage industry. Therefore, management's remarks on contract coverage for fiscal 2027, manufacturing capacity, and the partnership with Kioxia may be as important as the quarterly "headline numbers."
SanDisk shares closed at $1,214.83 on July 31, falling about 5.2% that day. For the entire month of July, the stock accumulated a decline of roughly 47%, marking its worst monthly performance since returning to public trading as an independent company in February 2025. This followed an exceptionally strong rally earlier. The July sell-off indicates that investors have become more cautious about high valuations and crowded AI-themed trades. However, the price correction has also somewhat alleviated valuation pressure ahead of the earnings report. If the results show revenue exceeding expectations, gross margins breaking above 81%, and an optimistic outlook for fiscal 2027, SanDisk's stock could see a rebound recovery. Conversely, if NAND pricing weakens, data center orders slow, or management adopts a more conservative tone, the recent downtrend could persist, even if year-over-year growth rates remain impressive.
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