SanDisk's 1,493% Surge: How NAND Supply Cuts and AI Demand Reshaped the Memory Market

Key points

• SanDisk stock returned 1,493% in the twelve months to October 1, 2026, significantly outperforming the S&P 500’s 16.0% return.
• Fiscal 2026 revenue reached $20.2 billion, up 175%, driven primarily by price increases rather than volume growth, which rose only mid-teens.
• Operating margins expanded from 6.9% in the prior year to 62% in fiscal 2026, with adjusted gross margins hitting 84.6% in fiscal Q4 2026.
• Data centers became the fastest-growing end market, accounting for 38% of memory sales at the end of fiscal 2026, up from 12% a year earlier.
• Management expects only modest price increases in fiscal Q1 2027, with adjusted gross margins forecasted between 83% and 85%.
• The company eliminated all long-term debt and generated $11.5 billion in free cash flow during fiscal 2026.

Background

SanDisk spun off from Western Digital in February 2025 as a pure-play NAND flash maker entering an oversupplied market. Prior to the recent surge, the company reported operating losses in fiscal Q3 2025 and only a 2.7% operating margin in fiscal Q4 2025. The stock’s rise coincided with broader AI infrastructure spending, with SanDisk joining the S&P 100 in September 2026 and attracting significant hedge fund interest.

How outlets are covering it

Trefis emphasizes the supply cut announced in May 2025 as the key early signal of rising prices, noting that memory prices follow supply-demand balance. 24/7 Wall St. highlights the shift to a 'New Business Model' with multi-year contracts and the elimination of long-term debt, while cautioning that a hyperscaler capex cut could break the bull case. Yahoo Finance’s source was inaccessible due to a technical error, so no additional perspective could be extracted. Trefis notes that while the direction of price increases was visible in mid-2025, the magnitude of the run was not predictable. 24/7 Wall St. points to a single-digit forward earnings multiple as evidence that the market doubts the sustainability of current earnings.

Why it matters

SanDisk’s performance illustrates how supply constraints and AI-driven demand can rapidly transform a commoditized memory market. The shift from 12% to 38% of sales from data centers signals a structural change in the memory industry, with long-term contracts and high margins potentially sustaining profitability beyond the current cycle. However, the risk of a downturn in hyperscaler spending remains a key concern for investors.

What to watch

Fiscal Q1 2027 results will be critical in determining whether price increases are fading. An adjusted gross margin above 85% would suggest stronger-than-expected pricing, while a margin below 83% would signal a potential downturn. Management expects only modest price increases in fiscal Q1 2027, and the company’s ability to maintain supply constraints and multi-year contracts will be key to sustaining the current trajectory.