Sandisk in the AI stack

The business and what the filings show

Sandisk makes NAND flash memory and the solid-state drives built from it, for data centers, PCs, phones and consumer devices. It became an independent company when Western Digital separated its flash and hard-drive businesses, so it has fewer quarters of its own history than most companies on this map. Over its latest four quarters it reported $20.2B of revenue, +175% on the four quarters before, at a 71% gross margin and a 61% operating margin: numbers that would have been unthinkable for a flash maker two years ago.

The most important change is in how Sandisk sells. Starting in fiscal 2026 it signed long-term agreements with several data-center and edge customers that commit it to deliver, and them to buy, stated volumes over several years. Those agreements are why it reports remaining performance obligations of $59.8B, an extraordinary backlog for a business that used to sell at spot prices. Its 10-K says only about 19% of that is expected to turn into revenue over the next twelve months.

That makes Sandisk the clearest test in the memory layer of whether contracts can take the cycle out of a commodity. Flash has always swung between shortage and glut; long-term agreements lock in volume and some price visibility, but they also limit the company’s flexibility if prices rise further, and they depend on customers honoring them if demand turns. Its top ten customers bought 44% of its output in fiscal 2026, and no single customer passed 10%.

How AI shows up in the numbers

AI shows up at Sandisk as demand for high-capacity enterprise SSDs that feed data to accelerators during training and inference, and as the long-term supply agreements data-center customers have signed to secure that capacity. The quarterly revenue chart on this page shows how quickly that changed its numbers. Because flash prices move with supply and demand across the whole industry, the margin is as much a reading of the NAND cycle as of Sandisk’s own execution.

For scale, Sandisk’s revenue over the latest four quarters equals 4% of the $566B the five largest buyers spent on capital projects over their latest four quarters. Their capex rose +81% on the year before, while Sandisk’s revenue grew +175%: faster than the spending, a sign it is capturing a growing share of each capex dollar or selling to buyers beyond the five.

How it talks about AI

Sandisk is not yet in the set of companies whose earnings releases we read sentence by sentence, so this section quotes its annual report on Form 10-K instead. Statements in a 10-K carry more weight than a press release or an earnings call: they are part of a filing the company signs and can be held to, and the risk factors in particular say what management believes could go wrong. The sentences below are quoted from its latest 10-K.

Read them for two things: how directly the company ties its growth to AI, and how much it is willing to quantify. A company that names AI as its main growth driver is making a claim its revenue mix can be checked against in the next filing; one that says AI’s effect is hard to measure is telling you its numbers won’t isolate it.

The figure to set these statements against is Sandisk’s own growth: revenue +175% over its latest four quarters at a 71% gross margin. If AI is driving the business as described, the next filings should show it in the mix of revenue by product or customer, and in margins that hold up as volumes grow.

• On its products: “With a differentiated innovation engine driving advancements in storage and semiconductor technologies, our broad and ever-expanding portfolio delivers powerful flash storage solutions for artificial intelligence ("AI") workloads in datacenters, edge devices, and consumer applications.” 10-K, August 17, 2026
• On its risks: “Our operating results may fluctuate due to changes in demand, industry cycles and the timing of customer deployments, including AI-related data center investments, and our ability to accurately forecast demand as a result of these changing market conditions.” 10-K, August 17, 2026

The trend in the numbers

Since the start of 2023, Sandisk’s largest quarter by revenue was Q2 2026 at $9.0B, and its highest gross margin was 85% in Q2 2026. The latest quarter set the revenue record for the period.

Quarter by quarter, Sandisk’s revenue grew +23% in Q3 2025, +61% in Q4 2025, +251% in Q1 2026, +372% in Q2 2026 on the same quarter a year earlier. Growth has been accelerating.

Gross margin in the latest quarter was 85%, against 26% a year earlier, so it is keeping more of each dollar as it grows. Operating margin moved from 1% to 78% over the same span. Over the latest four quarters it turned 58% of its revenue into operating cash flow and spent 1% of revenue on capital projects, against 3% a year earlier.

Where it sits in the stack

Sandisk sits in the memory and storage layer of the AI stack. It is paid by the servers and chips layers; its own spending flows to foundry & tools.

Among the 5 companies in this layer on our map, it ranks number 2 by revenue and number 2 of 5 by revenue growth. Its gross margin of 71% compares with 75% for the layer as a whole, close to the layer average. The full layer analysis is on the memory page.

Latest four quarters for 10-Q filers; latest fiscal year for 20-F filers. Companies under $100 million of revenue are left out.

Against the 5 US-listed companies in its layer, Sandisk grew +175% over the latest year versus +180% for the layer combined, and converted 57% of revenue into free cash flow versus 43% for the layer. It is growing more slowly than its layer, so its share of the layer’s revenue is shrinking.

What has to go right, and what could go wrong

What has to go right. Data-center demand for flash has to keep growing faster than the industry adds capacity, and customers have to honor the long-term agreements behind Sandisk’s backlog at prices that keep margins well above past cycles.

What could go wrong. Flash makers have added capacity in every past upturn, and prices have fallen when they did. Long-term agreements reduce that risk but don’t remove it: they can constrain Sandisk if prices rise and may be renegotiated if they fall.

These describe the conditions the business depends on, as the filings show them. They are not a view on the stock.

Through the lens of Investing in AI

Rob May’s book offers six mental models for telling AI moats from traps. The one most useful for Sandisk’s layer is “Be careful evaluating AI COGS”: AI margins can improve dramatically as human labor comes out, or deteriorate as inference bites. Some companies reach software-like margins; others stay closer to services. Underwrite the trajectory, not today's margin.

The question it asks of any company is: Why will gross margin be higher in three years, and what could stop it? Applied to Sandisk, the filings on this page are the place to start: the margin trend shows whether it holds scarce value or passes it through, the customer and financing disclosures show who it depends on, and the commitments show what it has promised before the revenue arrives.

Customers and concentration

US companies must disclose any customer that accounts for 10% or more of revenue, and foreign filers usually describe their largest customers. Concentration matters because a company’s growth is only as durable as the handful of buyers behind it, and in the AI stack those buyers are often the same few companies.

• “For 2026, 2025, and 2024, the Company’s top 10 customers accounted for 44%, 40% and 41% of the Company’s net revenue, respectively.” 10-K, August 17, 2026
• “For 2026, 2025 and 2024, no single customer accounted for more than 10% of the Company’s net revenue.” 10-K, August 17, 2026

Commitments and backlog

• Backlog. Sandisk reports $59.8B of remaining performance obligations, 3.0 times its revenue over the latest four quarters: contracted revenue not yet earned.
• Purchase commitments. $5.9B of unconditional purchase obligations as of July 3, 2026 (10-K): what it has contracted to buy from its own suppliers.
• Long-term supply agreements. “As of July 3, 2026, the transaction price allocated to remaining performance obligations was $59.8 billion, of which $58.7 billion has not yet been billed and $1.1 billion has been recorded as contract liabilities.” 10-K
• Share of backlog due within a year. “Approximately 19% of the remaining performance obligations from these contracts with customers are expected to be recognized as revenue over the next twelve months.” 10-K

What to watch

Sandisk’s next quarterly report will cover the quarter ending around October 2, 2026. Large companies must file a 10-Q within 40 days of a quarter’s end and a 10-K within 60 days of the fiscal year’s end, so the new figures should arrive by about December 1, 2026 at the latest. This page, the layer pages and the next quarterly report all update from that filing.

• Gross margin each quarter: in a commodity business it is the first place a turn in the cycle shows.
• Remaining performance obligations and the share due within twelve months, which show how much of future revenue is contracted.
• Industry capacity additions announced by flash makers, the usual cause of the next glut.
• Its place in the next quarterly AI Stack Report, which updates every company on the map from the new filings.

Figures from Sandisk’s SEC filings, latest period ended July 3, 2026. Other companies: all company pages.