Sandisk Has Secured Two-Thirds of Next Year's Output Amid AI Storage Demand
Sandisk (NASDAQ:SNDK) has secured contracts for half of its current fiscal year output and two-thirds of next year’s, with floor prices to protect margins during potential downturns. The company reported a significant revenue increase in the most recent quarter due to strong demand from data centers driven by AI growth. Sandisk recently joined the S&P 100 after being spun off from Western Digital (WDC) and has seen its stock rise over 640% this year, outperforming other stocks in the index. Despite these gains, concerns remain about whether long-term contracts will hold as flash memory prices may eventually decline due to increased supply. Sandisk aims for mid-to-high-teens revenue growth through fiscal years 2028–2030 and has authorized a $14 billion share buyback program. However, the stock is currently trading at an eight-times earnings multiple typical of peak cycles in memory stocks. The company’s gross margin reached 84.6% last quarter but could decline if supply catches up with demand. While Sandisk's contracts include price floors and volume commitments, it has not disclosed specific pricing details above which they will remain profitable during a potential glut.
Topics: AI data centers flash storage long-term contracts S&P 100 Sandisk