SanDisk told investors it expects to hold gross margins around 80% through fiscal 2030, a step down from the 84.6% it posted in the quarter ended July 3, 2026. The guidance didn't scare anyone — shares closed up 13.67% at $1,528.11 on Thursday.
The margin path
The company's gross margin has been on a tear. It sat at 22.5% in March 2025, then climbed to 26.2%, 29.8%, 50.9%, 78.4%, and finally 84.6% in the latest quarter. That surge came on the back of explosive revenue growth: $8.97 billion last quarter, up 51% quarter-over-quarter and 372% year-over-year. Full-year revenue hit $20.2 billion.
About two-thirds of that growth came from higher prices, with the rest from shipping more chips. The NAND market itself shrank almost 40% in 2023 to $36.7 billion, one of the steepest declines in semiconductor history — so the current pricing power is a sharp reversal.
The customer contracts
SanDisk has locked in eight customers on multi-year deals covering about half of fiscal 2027 shipments, rising to two-thirds in fiscal 2028. Those contracts include price floors, which gives the company a clearer view of future revenue. CEO David Goeckeler said: "We closed fiscal 2026 with a leading technology portfolio, established datacenter as a key growth pillar, and deepened our customer partnerships."
The deals also address a concern raised by investor Steve Eisman, who has argued the AI trade's weak spot is its reliance on a handful of buyers. SanDisk's eight contracted customers spread that risk.
The stock's wild ride
SanDisk shares have been anything but steady. They peaked at $2,335 on June 25, then fell to $1,015.89 on July 29 — a 56% drop in five weeks — before bouncing 50%. Even after Thursday's gain, the stock is up 541% this year but still 35% below its June high.
Valuation tells two stories. The stock trades at 20.7 times past earnings, but only 7.2 times expected earnings. Analysts see more room: JPMorgan resumed coverage with an Overweight rating and a price target of $2,250, about 47% above Thursday's close. Susquehanna has a target of $3,250, and Jefferies sits at $1,750.
The competitive threat
Not everyone is convinced the good times last. Chinese manufacturer YMTC could reach 10% of global NAND capacity as soon as next year, with its third Wuhan plant starting mass production in 2027. That added supply could pressure prices, which is exactly what SanDisk's price floors are designed to cushion.
The question now is whether SanDisk can hold its pricing power as YMTC ramps up — and whether the 80% margin guidance proves conservative or optimistic.
