The Zhitong Finance App learned that after the US stock market closed on Thursday, SanDisk (SNDK.US) announced financial results for the first quarter of the 2027 fiscal year. Driven by a surge in demand for NAND flash memory driven by artificial intelligence infrastructure construction and rising product prices, the company's revenue for the quarter increased 378% year over year, and data center business revenue soared nearly 17 times. The company expects further revenue growth in the next quarter and announced the implementation of a 1-split 8-share split plan.
For the first fiscal quarter ending October 2, 2026, SanDisk achieved revenue of US$11.031 billion, an increase of 378% over US$2.308 billion in the same period last year, and an increase of 23% over US$8.965 billion in the previous quarter.
The company's GAAP net profit for the first fiscal quarter reached US$8.101 billion, a significant increase from US$112 million in the same period last year, and US$6.903 million in the previous quarter; GAAP diluted earnings per share were US$52.60, up from US$0.75 in the same period last year and US$43.97 in the previous quarter. After adjustments, SanDisk's non-GAAP net profit for the first fiscal quarter reached US$7.624 billion, up from US$181 million in the same period last year and US$6.162 billion in the previous quarter; non-GAAP diluted earnings per share were US$49.51, up about 26% from US$39.25 in the previous quarter, and US$1.22 in the same period last year.
The company's non-GAAP gross margin reached 85.1% in the first fiscal quarter, up 55.2 percentage points from 29.9% in the same period last year, and 0.5 percentage points higher than 84.6% in the previous quarter.
Notably, SanDisk said that of the month-on-month increase in revenue in the first fiscal quarter, about 60% came from an increase in product shipments, while the remaining 40% came from a rise in product prices, indicating that strong demand and price increases jointly drove performance growth.
Data center business revenue surged 1682% year over year, AI infrastructure construction boosts storage requirements
By terminal market, the data center business has become SanDisk's fastest growing business segment.
In the first fiscal quarter, SanDisk data center business revenue reached US$4.8 billion, up 61% from the previous quarter and surged 1682% from the same period last year. The growth rate exceeded the company's estimate of overall market growth for the quarter.
SanDisk said that as artificial intelligence infrastructure continues to expand, data center demand for high-performance enterprise-grade solid-state drives and high-capacity storage platforms is growing rapidly. The company distributed more product supplies to the data center market in the first fiscal quarter to meet growing customer demand. The company pointed out that customer partnerships, including three US hyperscale cloud computing service providers, have supported the continued expansion of the data center business.
According to SanDisk's internal market model, the share of data centers in the overall NAND industry's bit demand has risen from about 20% at the beginning of this century to about 50% now.
Looking ahead, the company expects data centers to account for more than 55% of the total NAND market demand in 2027. After more than doubling in 2026, data center bit demand is expected to further increase by about 40% year-on-year in 2027.
SanDisk believes that the continued growth of AI inference workloads will further expand the role of NAND Flash in AI infrastructure.
As AI models handle longer prompts, more complex inference tasks, multi-modal input, and persistent user context, the system's demand for storage capacity continues to increase. Among them, flash memory can hold a wider range of contextual information at a lower cost and reduce the need for repeated computation.
SanDisk expects that by around 2030, KV cache-related applications will account for about one-third of the AI data center flash memory market. At that time, the scale of market opportunities brought by AI data centers is expected to be close to the current NAND industry as a whole.
Edge computing business revenue increased 320% year over year, consumer business declined 39%
In terms of other business, SanDisk's edge computing (Edge) business revenue for the first fiscal quarter reached US$5.8 billion, up 7% from the previous quarter and 320% from the same period last year. The business covers applications such as smartphones, personal computers, automobiles, tablets, and physical artificial intelligence.
SanDisk said that the automotive business is becoming an increasingly important growth driver in the edge computing field and is expected to grow into one of the largest terminal markets for this business in the long term. The company's automotive and IoT customer demand grew strongly in the first fiscal quarter. High-end and mainstream market performance was relatively steady, but the contraction in demand in the low-end market offset some of the growth.
In contrast, consumer businesses are still under pressure. In the first fiscal quarter, SanDisk's consumer business revenue was US$397 million, down 29% from the previous quarter and 39% from the same period last year. The company said that the consumer market is adapting to higher product prices, which has had a certain impact on short-term demand.
Long-term supply agreement locks in $93.9 billion minimum revenue demand signal extended beyond 2030
In addition to short-term performance, the long-term customer cooperation arrangements disclosed by SanDisk are also worth paying attention to.
The company said that by the end of the first fiscal quarter, it had signed new business model agreements with eight customers in the data center and edge computing sectors. Based on the lowest price agreed upon in the contract, the minimum contract revenue corresponding to these agreements reached 93.9 billion US dollars. Among them, the remaining performance obligations at the end of the quarter were US$88.9 billion, and the total amount of financial guarantees in the form of related cash deposits and financial instruments reached US$16.5 billion.
Judging from the production capacity schedule, SanDisk expects that about half of the NAND bit supply for FY2027 has already been promised through relevant agreements, and this ratio for FY2028 is about two-thirds. The weighted average duration of relevant agreements exceeds 4 years, up to 5 years.
SanDisk said that the company completed two new long-term cooperation agreements in the first fiscal quarter, and is also discussing extending the cooperation period with existing customers and evaluating new cooperation arrangements with potential new customers.
The company pointed out that demand signals from customers have been extended beyond FY2030, and recent contacts with leading artificial intelligence companies also show that there is still room for further growth in future demand. Notably, SanDisk said that demand corresponding to its long-term agreement reserves had exceeded the company's supply capacity until the end of this decade.
Gross margin exceeded 85%, and operating profit increased dramatically
Driven by strong revenue growth and rising product prices, SanDisk's profitability improved significantly. In the first fiscal quarter, the company's GAAP gross profit reached US$9.378 billion, a significant increase from US$687 million in the same period last year; GAAP gross margin reached 85.0%, up from 29.8% in the same period last year. Non-GAAP gross profit was $9.384 billion, and non-GAAP gross margin was 85.1%.
In terms of operating profit, SanDisk's GAAP operating profit for the first fiscal quarter reached 8.78 billion US dollars, a significant increase from 176 million US dollars in the same period last year; non-GAAP operating profit reached 8.871 billion US dollars, compared to 7.104 billion US dollars in the previous quarter, and only 245 million US dollars in the same period last year. The company's GAAP operating margin for the first fiscal quarter reached 79.6%, and the non-GAAP operating margin reached 80.4%.
In terms of cash flow, SanDisk's operating cash flow for the first fiscal quarter reached US$6.363 billion, a significant increase from US$488 million in the same period last year, but lower than US$7.126 billion in the previous quarter.
Excluding the impact of prepayments, deposits and cash flow related to joint ventures related to long-term business models, the company's adjusted free cash flow for the first fiscal quarter reached US$5.696 billion, up from US$5,035 billion in the previous quarter.
Quarterly stock buyback of $5 billion announced a 1-split 8-share split plan
In terms of return on capital, SanDisk spent $5 billion in the first fiscal quarter to buy back approximately 3.2 million shares. In addition to the $4.5 billion repurchase in the previous quarter, the company invested a total of 9.5 billion US dollars in stock repurchases over the past two quarters, repurchasing a total of about 6 million shares, which is equivalent to about 4% of tradable shares.
As of the end of the first fiscal quarter, the company's share repurchase plan still had a balance of US$10.5 billion. SanDisk said that the company will continue to prioritize investment in business, maintain a sound balance sheet, and plan to return all excess cash to shareholders.
Additionally, SanDisk's board of directors approved the implementation of a 1-split 8-share split plan. According to the arrangement, the additional shares are expected to be distributed on November 19, and trading of the split adjusted shares is expected to begin on November 20.
Revenue for the second fiscal quarter is expected to reach a maximum of $12.6 billion, and adjusted earnings per share of up to $57
Looking ahead to the second quarter of fiscal year 2027, SanDisk expects revenue to be between US$12.2 billion and US$12.6 billion, with a median value of US$12.4 billion, an increase of about 12% from US$11.031 billion in the first fiscal quarter.
The company expects GAAP gross margin to be between 84.4% and 85.4%, and non-GAAP gross margin between 84.5% and 85.5% for the second fiscal quarter, which means that profitability is expected to remain at a high level.
Meanwhile, the company expects non-GAAP diluted earnings per share for the second fiscal quarter to be between 55 US dollars and 57 US dollars, based on a median value of 56 US dollars, an increase of about 13% from 49.51 US dollars in the first fiscal quarter.
SanDisk expects GAAP operating expenses to be between $677 million and $745 million and non-GAAP operating expenses between $540 million and $560 million for the second fiscal quarter. The non-GAAP tax rate for the second fiscal quarter is expected to be around 14.3%, and the diluted weighted average number of shares outstanding is approximately 151 million shares.
Regarding subsequent market trends, SanDisk said that the increase in structural demand brought about by the construction of artificial intelligence infrastructure and the expanding application of NAND flash memory in the field of AI inference will continue to support the development of the storage industry. The company expects the NAND market to remain strong in 2027, and the data center business will remain the main growth engine.