Key Takeaways:
Sandisk's data center business is compounding at rates that echo Nvidia's early AI breakout, yet the market still prices the NAND flash maker like a cyclical memory name.
Sandisk (NASDAQ: SNDK), spun off from Western Digital in February, generated $20.2 billion in revenue for the fiscal year ended July 3, up 175 percent year over year, with data center sales jumping 437 percent to $5.2 billion. The company's fourth-quarter data center revenue alone reached $2.9 billion, up more than twelvefold from a year earlier and nearly doubling sequentially.
"The rate of growth in Sandisk's data center segment is in the same neighborhood as what Nvidia experienced during its early AI breakout," Adam Spatacco, an analyst at The Motley Fool, wrote in a note published Thursday. "The percentage climb is already comparable to Nvidia's fiscal 2024 surge."
Nvidia's data center revenue rose 217 percent to $47.5 billion in fiscal 2024, then grew another 142 percent to roughly $115 billion in fiscal 2025. Sandisk's data center operation is smaller in absolute dollars — hyperscalers prioritized GPU procurement before storage — but the growth trajectory is tracking a similar curve. The company's edge business, covering AI-enabled PCs, phones, cars, and gaming consoles, contributed $12.2 billion, up 195 percent, while its consumer division grew a more modest 29 percent to $2.9 billion.
The bull case rests on a single number: $93.9 billion. Sandisk has signed New Business Model agreements with eight data center and edge customers, locking in committed bit volumes with fixed and variable pricing floors and ceilings. These contracts run as long as five years with a weighted average term exceeding four years. At the end of the fourth quarter, the company held $59.8 billion in remaining performance obligations, a figure that climbed to $91.1 billion after accounting for two post-quarter agreements.
These NBM contracts function for Sandisk the way a new chip architecture launch once did for Nvidia. When Nvidia announced Hopper or Blackwell, hyperscalers lined up almost immediately, providing years of visible data center demand. Sandisk's agreements convert historically cyclical NAND price swings into a defined backlog without a product codename attached.
The structure matters because NAND flash has been among the most volatile segments in semiconductors. Samsung and SK Hynix, Sandisk's primary competitors in NAND, have both endured brutal oversupply cycles. Sandisk's joint venture with Kioxia in Yokkaichi, Japan, supplies roughly 48 percent of its total NAND wafer output, a relationship that provides manufacturing scale but limits strategic flexibility.
Despite the stock trading near $1,500, Sandisk's valuation metrics tell a different story. The company trades at roughly 20 times trailing earnings and about 7 times forward earnings. Nvidia, by comparison, never traded below 30 times forward earnings during its fiscal 2024 and 2025 breakout, eventually sustaining multiples above 50 as it captured the bulk of the initial AI infrastructure build-out.
The market is treating Sandisk like a cyclical memory name even as its revenue mix shifts decisively toward data center. JPMorgan has called Sandisk uniquely positioned for a structural inflection in NAND, citing the new business model as a reset higher for margins and cyclicality. Evercore ISI points to the company's long-term framework through fiscal 2030, including targeted mid-to-high teens revenue growth and high margin levels, supported by contractual protections and high-bandwidth flash opportunities.
Morgan Stanley and Barclays both stress tight supply conditions in memory, with Barclays framing memory and storage as an attractive vertical below accelerators. The bear case comes from Jefferies and Citi, which trimmed price targets in August after an in-line September outlook and more muted pricing, with investors watching gross margin guidance and inventory build.
Sandisk shares have risen roughly thirtyfold over the past year and are up more than 500 percent in 2026 alone, even after sliding about one-third from their June peak. The question is whether the market has already priced in the AI storage supercycle or whether the valuation gap to Nvidia's early breakout leaves room for further expansion. With $91.1 billion in contracted revenue and a forward multiple near single digits, the market appears to be pricing a downcycle as the base case — a disconnect that could narrow as data center revenue continues to compound.
This article is for informational purposes only and does not constitute investment advice.
