Sandisk Corporation (SNDK) Q1 2026 Earnings Call Transcript

Sandisk Corporation reported a strong Q1 FY26, with revenue of $2.3 billion (+21% sequentially) and non-GAAP EPS of $1.22, both exceeding guidance, driven by robust demand for NAND products. The company achieved a net cash position of $91 million ahead of schedule and expanded non-GAAP gross margins to 29.9%. Demand for NAND is significantly outpacing supply across all end markets, a dynamic expected to persist beyond calendar year 2026, leading to strategic allocation and customers seeking multi-year supply commitments. Sandisk is capitalizing on AI-driven data center growth, with its BiCS8 technology and Stargate SSDs gaining traction, contributing to a 26% sequential increase in data center revenue. For Q2 FY26, Sandisk projects revenue between $2.55 billion and $2.65 billion, with non-GAAP gross margins of 41-43% and EPS of $3.00-$3.40, reflecting continued strong pricing and bit growth.

Analysis

Sandisk (SNDK) reported a robust Q1 FY26, surpassing guidance with $2.3 billion in revenue (up 21% sequentially) and non-GAAP EPS of $1.22. This performance was fueled by robust NAND demand outpacing supply, a trend expected to continue beyond calendar year 2026, prompting customers to seek multi-year supply commitments. The company also achieved a net cash position of $91 million six months ahead of its Investor Day target.

The data center segment was a primary growth engine, with revenue increasing 26% sequentially, largely driven by AI-related demand. Sandisk's BiCS8 technology, which accounted for 15% of bits shipped, is crucial for its high-capacity, power-efficient SSDs and is undergoing qualification with hyperscalers. This positions Sandisk to capture significant value from the projected $1 trillion investment in AI infrastructure by 2030.

Non-GAAP gross margin expanded notably to 29.9% in Q1 and is guided to 41-43% for Q2, reflecting strong pricing power and cost tailwinds from the BiCS8 ramp. Inventory days decreased from 135 to 115, indicating efficient supply management. The Q2 FY26 guidance projects continued revenue growth to $2.55-$2.65 billion and non-GAAP EPS of $3.00-$3.40, underscoring an optimistic outlook.

Key Decisions for Investors

• Investors should monitor Sandisk's ability to sustain pricing power and gross margin expansion as BiCS8 ramps and data center qualifications progress, given the strong Q2 guidance.
• Evaluate the long-term implications of multi-year supply commitments from hyperscalers, which could stabilize revenue and improve visibility in a historically cyclical industry.
• Assess the company's capital allocation strategy, particularly its balance between investing in BiCS8 transition and returning cash to shareholders, following the early achievement of its net cash position.