Key Points
Each revenue dollar now carries about 15 cents of cost of revenue, against about 70 cents a year ago.
Despite $5.0 billion of buybacks this quarter, Sandisk’s diluted share count is still about 3% above a year ago.
Sandisk (NASDAQ:SNDK) grew fiscal first-quarter 2027 revenue 23% from the prior quarter to about $11.0 billion, and data center sales supplied about 88% of the gain. Shares were up nearly 3% in after-hours trading, shortly after reporting. Revenue is nearly five times its year-ago level, and higher prices and product mix are doing much of the work. Guidance calls for growth to slow to about 11% to 14% next quarter, with a steady gross margin near 85%.
Key Numbers
| Metrics | Q1 2027 | Q1 2026 | % Change |
|---|---|---|---|
| Revenue | $11 billion | $2.3 billion | 378% |
| Data Center Revenue | $4.8 billion | $269 million | 1,685% |
| Gross Margin (GAAP) | 85% | 29.8% | 55.2 percentage points |
| Diluted Earnings per share (GAAP) | $52.60 | $0.75 | 6,913% |
Table by author. Source: Company earnings release. Note: The earnings per share is on a pre-split basis. GAAP stands for generally accepted accounting principles.
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What It Means
Cost of revenue was nearly flat year over year, so shipments alone can't explain the jump; revenue per unit must have risen. The release gives no price or shipment data, so it can't show how much came from price and how much from mix. Memory is a commodity, so price gains drop almost straight to profit and can also reverse.
Data center is the real shift. It's now about 44% of revenue, and consumer sales fell, so the mix is tilting toward AI infrastructure. That is the lasting change; pricing is the cyclical part.
Cash lagged profit. Receivables grew about 40% in one quarter, well ahead of revenue, and adjusted free cash flow rose less than revenue. That may be due to shipment timing, but the release doesn't say so.
What to Watch Next
Monitor whether gross margin remains near 85% as revenue approaches the guided $12.2 billion to $12.6 billion range. A slip would suggest prices are softening. Also track whether adjusted free cash flow keeps pace with revenue, since Sandisk spent $5.0 billion on buybacks this quarter.
Sharice Wells has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.