SanDisk (SNDK) reinforced the artificial intelligence (AI) storage bull case with a record Fiscal Q3 2026, as strong revenue confirmed the company’s successful transition into a capital-efficient AI infrastructure company. The quarter showed the business has structurally changed and improved: zero debt, record free cash flow, and multi-year contracted revenue now define SanDisk’s earnings profile.
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New trading tool for STX bullsYet at around 9.7x forward earnings, the market has not repriced that transformation. I remain bullish on SNDK’s shares, the memory-chip heavyweight, and view the current pullback from the recent high of $1,439.70 as a credible entry point.
A Quarter That Redefines SNDK’s Earnings Floor
The Fiscal Q3 2026 earnings report, released April 30, showed a business with record revenues of $5.95 billion that beat its own guidance by more than $1 billion at the midpoint. Data center revenue drove the result, rising 233% sequentially to $1.467 billion, driven by strong demand for triple-level cell (TLC) enterprise solid-state drives (SSDs). This outperformance reflected a shift toward higher-value enterprise and AI customers as well as meaningfully stronger NAND pricing.
SanDisk’s earnings results showed further standout metrics. Non-GAAP operating margin reached 70.9%, up from 37.5% in the prior quarter. Adjusted free cash flow of $2.955 billion, equal to 49.7% of revenue, allowed management to fully repay the remaining $650 million term loan, leaving zero debt and $3.735 billion in cash.
Moreover, the company guided Fiscal Q4 revenue of $7.75 billion to $8.25 billion, with the midpoint implying approximately 35% sequential growth, and earnings-per-share (EPS) of $30 to $33. Finally, the board authorized a $6 billion share repurchase, alongside a commitment to return 50% of free cash flow to buybacks over the next two years. Management’s confidence in the sustainability of cash generation could help generate further momentum for SanDisk shares.
NBM Contracts Establish a Revenue Floor
SanDisk’s New Business Model (NBM) framework fundamentally changes how the company prices its output, replacing spot-market exposure with multi-year contracted revenue. Historically, companies in the NAND flash memory sector have been at the mercy of volatile spot pricing cycles, which SanDisk has been working to end. The company signed three NBM contracts during Fiscal Q3 with aggregate minimum contractual revenue of approximately $42 billion, backed by over $11 billion in financial guarantees and third-party collateral. Two additional agreements followed early in Fiscal Q4.
These five agreements cover more than one-third of SanDisk’s projected bit output in Fiscal 2027 and represent a meaningful change in earnings predictability. The contracts contain a mix of fixed and variable pricing, with shorter-term elements largely fixed. Minimum revenue commitments establish a cash flow floor that the company’s historical operating model did not provide. Thus, even if a client fails to fulfill their procurement obligations, the financial commitments are automatically transferred to SanDisk as compensation. For SanDisk investors, NBMs help reduce exposure to spot market volatility.
The quarterly report also highlighted SanDisk’s supply-side discipline, while management extended its joint venture with Kioxia (KXHCF) through December 2034 and invested approximately $1 billion in Nanya Technology (NNYAF) to secure dynamic random-access memory (DRAM) supply. The U.S.-led Pax Silica coalition, which has drawn 14 countries across Asia, Europe, and the Middle East, reduces global supply-chain reliance on China in favor of U.S.-aligned producers.
Current Forward Earnings Multiple Misprices This Business
At around 9.7x forward earnings, SanDisk trades at a discount to a number of its technology hardware and AI infrastructure peers, which typically carry materially higher multiples. Western Digital (WDC) carries a forward multiple of approximately 11.4x, and Seagate Technology (STX) trades at roughly 14.4x forward earnings. TipRanks readers may be interested to know that Micron Technology (MU) trades at a forward P/E of approximately 8.1x.
In addition, the Technology Hardware, Storage & Peripherals sector carries a median P/E of approximately 32x, while the broader S&P 500 (SPX) Information Technology sector trades at approximately 35.4x earnings as of May 2026. Finally, the Tech Hardware Industry three-year average stands at 33.3x. Thus, even accounting for the historical cyclicality of the NAND flash industry, the current valuation does not reflect the structural improvements in SanDisk’s business.
Three ETFs for Diversified NAND and Memory Exposure
For investors seeking SNDK exposure through an exchange-traded fund (ETF), three vehicles offer differentiated approaches. The Roundhill Memory ETF (DRAM), with approximately 5.8% SNDK weighting across pure-play global memory companies, suits investors seeking concentrated exposure to the NAND and memory cycle. Meanwhile, the Invesco S&P Spin-Off ETF (CSD) holds SNDK as one of its largest positions at approximately 12.1%.
Finally, the Invesco S&P 500 Equal Weight Technology ETF (RSPT) holds SNDK at approximately 2.2%, making it a suitable choice for investors who prefer broad, equal-weighted sector exposure.
Is SNDK Stock a Buy, Sell, or Hold?
SanDisk Corp currently carries a Strong Buy consensus rating on TipRanks, based on 16 analyst ratings from the past three months, consisting of 13 Buys, three Holds, and no Sells. The average 12-month price target for SNDK is $1,409.06, implying a downside of approximately 8.95% from the current share price of approximately $1,547.56.
Conclusion
I remain bullish on SNDK because SanDisk’s Q3 results reflect a company at a structural inflection point, with nearly one-third of its shipments moving to long-term contracts and validating a structurally higher earnings floor. Zero debt, $3.735 billion in cash, and a manufacturing partnership with Kioxia secured through 2034 are the profile of a business whose stock belongs in a long-term portfolio.
I believe that at around 9.7x forward earnings, the market still prices SanDisk as a commodity supplier. The Fiscal Q4 revenue guidance midpoint of $8 billion, a strong Fiscal 2027 EPS growth forecast, and a $6 billion buyback authorization collectively contradict that assumption. For investors who can accept the cyclicality inherent in NAND flash markets, the current pullback is a credible long-term entry into a business the market has yet to fully reprice.