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AI/Crypto/TMT Investor, Global Liquidity & Macro, Cycle-Based Investing
Sandisk's ability to keep a 75% operating margin over the next few years may not be fully priced in, even though its long-term agreements are widely known; the market was still shocked by that guidance. Cash beyond investment going to buybacks or dividends would give the stock a big lift, and expectations for HBF add to the case. x.comÂ
SanDisk's aggressive guidance rests on long-term agreements that set a high revenue floor. Deals with eight major customers average four years, cover about 60% of 2027-28 capacity, and carry $93B in minimum revenue and $16.5B in deposits. That floor alone implies over $23B a year, versus $20B of revenue in the last four quarters. Per Bernstein, the floor price is about $0.29/GB, near current ASPs, still yielding about 80% gross margin. Risks are the uncontracted 40% and execution. x.com x.comÂ
Sandisk's new long-range targets are a strong positive, and investors who treat it as a cyclical could face a couple of hard years watching the price rip. Sandisk laid out FY28-FY30 targets of mid-to-high-teens revenue growth, about 80% non-GAAP gross margin and about 50% adjusted free cash flow margin, and expects to return 100% of excess cash to shareholders. x.comÂ
Sandisk could be the memory supercycle's biggest winner because long-term NAND contracts may make earnings more durable than in past cycles. About $93.9 billion of floor-priced deals cover half of expected FY27 bit shipments and two-thirds in FY28 amid rising AI storage demand. Floors do not guarantee margins; management's roughly 50% adjusted free cash flow margin target for FY28-30 is not reported cash flow. Profitable contracts and sustainable cash generation could support a higher multiple. … Show more
Sandisk's datacenter shipments and restrained bit-supply plan strengthen its growth case, without settling contract protection in a downturn. Management attributed roughly 60% of fiscal Q1 revenue growth to volume and 40% to price; datacenter sales rose 61% sequentially to $4.8B, supplying 88% of total growth. It retains mid-to-high-teens bit growth rather than accelerating supply. Consumer sales fell 29%, and the CFO cautioned against carrying Q2's growth rate into fiscal Q3. x.com x.comÂ
Sandisk's earnings growth makes its valuation look unusually low, with guidance showing no slowdown. Revenue rose 378% year over year, and $52.5 GAAP EPS implies a 6.1 annualized P/E, below Micron's. Sandisk's roughly 85% gross margin also compares favorably with SK hynix's apparently sub-50% NAND margin. Next-quarter guidance calls for $12.2 billion-$12.6 billion of revenue and $55-$57 non-GAAP EPS. x.com x.com x.comÂ
SanDisk's FY28-FY30 targets are insanely positive, implying as much as $300-350 per share of annual free cash flow at the end of the period. SanDisk targets mid-to-high-teens revenue growth, about 80% non-GAAP gross margin and about 50% adjusted FCF margin, and plans to return 100% of excess cash to shareholders, effectively a $130 billion buyback over four years. x.com x.comÂ
Sandisk's growth is coming entirely from higher prices, not more bits shipped, which makes it hard to sustain. Revenue grew 97% quarter over quarter as almost every hyperscaler raised capex to cover rising prices. Its roughly 80% gross margin is excessive and customers resent it; as long as demand far exceeds supply it can keep both, but supply eventually catches up and margins will erode. The open questions are how long new fabs take and whether Sandisk or rivals add the supply. x.com x.com … Show more
The need for more memory evident in every company's earnings report makes the market's negative view of Sandisk hard to understand. Yet splitting a stock above $1,000 is one of the dumbest moves a company can make: it hands market makers the ability to manipulate the shares through options, a risk for Sandisk. x.com x.comÂ
Sandisk still looks cheap despite a frothy market, because it actually makes money and data-center growth is strong. It should be able to keep that run going until high-bandwidth flash arrives around 2030, though the trade carries risk and may not work out. x.com x.comÂ
SanDisk has run up about 3,000% since its 2025 IPO, turning a $10,000 investment into nearly $300,000 in a year. x.comÂ
Sandisk's fast-growing data-center revenue strengthens its case among memory names with upside. Data-center revenue rose 61% quarter over quarter; revenue of $11.03B, adjusted EPS of $49.51 and adjusted gross margin of 85.1% all exceeded estimates. For upside among Micron, Sandisk and Kioxia, Micron ranks first, then Sandisk, then Kioxia, until further guidance. x.com x.comÂ
