SSD supplier Sandisk enjoyed another double-digit revenue growth quarter with sales increases in all three of its market segments
Revenues in its first fiscal 2026 quarter were up 23 percent year/year to 2.31 billion, rising a strong 21 percent quarter/quarter, with a $112 million GAAP profit which was down 7 percent Y/Y.
It used to segment its business into Cloud, Client and Consumer units. These have changed to Datacenter (the old Cloud), Edge (the old Client) and Consumer segments, reflecting Sandisk’s altered market focus. Sandisk said datacenter revenue was up 26 percent sequentially, at $269 million, but down 10 percent Y/Y. Edge SSD sales were $1.4 billion, up 30 percent Y/Y, while consumer SSD sales rose 27 percent annually to $652 million. The data center segment is a dogsbody – for now. That view is because Sandisk has two hyperscalers in qualification, a third hyperscaler and top storage OEM planned for calendar 2026. It’s down to AI as we shall see.
CEO David Goeckeler said: “Our strong balance sheet and leading portfolio, combined with this phase of renewed growth and profitability, enabled us to achieve our net cash positive milestone ahead of plan and is positioning us to drive meaningful long-term value for our shareholders.”
His company is benefitting from an AI-driven surge in SSD demand, and prices have risen as demand outpaces supply. It stated that the “rapid growth of AI is creating a strong tailwind for our high-capacity, power-efficient SSDs enabled by our BiCS8 technology.” Goeckeler said we are going thorough “one of the most transformative technology megatrends of our time driven by accelerated AI proliferation.”
Financial summary
- Gross margin: 29.8% vs 26.2% in prior quarter
- Operating cash flow: $488 million $94 million in prior quarter
- Free cash flow: $448 million vs $77 million in prior quarter
- Cash & cash equivalents: $1.4 billion vs $1.5 billion last quarter
- Diluted EPS: $0.75 vs -$0.16 in previous quarter and $1.46 a year ago
Sandisk says that it has achieved a net cash position approximately six months faster than the target shared during an Investor Day event in February.
For the datacenter, it’s pinning its growth hopes on high-capacity, PCIe 5 and the six, QLC SSDs, with a new 32-channel controller; the Stargate line. Capacities will be up to 256 TB next year, 512 TB in 2027 and potentially 1 PB after 2028. The qualifications mentioned above are for Stargate drives. Goeckeler talked about the market need for this technology in the earnings call: “With investments in data centers and AI infrastructure expected to surpass $1 trillion by 2030, the demand for NAND storage products capable of processing large volumes of data quickly and efficiently is increasing dramatically, creating a strong tailwind for our high-capacity power-efficient SSDs enabled by our BiCS8 technology.”
He said: “Global hyperscaler, neocloud and OEM customers are seeking to deepen their partnership with Sandisk.” The company is engaging with five major hyperscale customers in addition to the Stargate engagements listed above.
CFO Luis Visoso said: “We’re going from a mobile-centric company to really serve our customers, and we’re seeing very strong growth in our data center business.” The datacenter market is central to Sandisk’s revenue growth hopes, with Visoso adding: “We are very optimistic that we can build our business in data center where we are underrepresented.”
Goeckeler emphaized this, saying he sees the data center market emerges as the largest market in NAND.”
The edge market is seeing positive momentum from a PC refresh cycle, aided by Windows 11 adoption and Windows 10 end of life. There is also continued momentum as device upgrades accelerate, driving increasing NAND content.
Sandisk says the consumer segment remains a major focus for the company, driving revenue growth and attractive margins through cycles. Co-branded Nintendo Switch 2 microSD Express Card sales eclipsed 900 thousand units sold in the quarter. It also said that it has an expanded presence in handheld gaming with the new Sandisk microSD for ROG Ally on Xbox.
It believes demand for its products will exceed supply throughout calendar 2026 and beyond. It’s guiding second quarter revenues to be $2.6 billion +/- $500 million which will be an impressive 38.6 percent uplift on the year-ago quarter.
Goeckeler is enthusiastically bullish: “Our technology is arriving at exactly the right time. … the market is ready, the demand is real and the opportunity to drive meaningful earnings power is just starting.”
