Key Points
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TrendForce projects NAND flash contract prices to rise 70% to 75% in the spring quarter, then 10% to 15% in the current quarter.
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SanDisk says about two‑thirds of its fiscal fourth‑quarter sequential revenue growth came from higher pricing.
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The company’s gross margin reached 84.6% last quarter, up from 26.2% a year earlier.
NAND flash contract prices are forecast to climb 70% to 75% in the spring quarter, according to research firm TrendForce. For the current quarter, the same firm projects increases of 10% to 15%.
For most of the market, that shift is a footnote. For SanDisk (NASDAQ:SNDK), the closest thing to a pure NAND flash bet among large U.S. stocks, it is close to the entire investment case.
Image source: Getty Images.
Two‑thirds pricing
SanDisk’s fiscal fourth quarter of 2026 (the period ended July 3) showed what the steep part of the price curve does for this business. Revenue reached $8.97 billion, up 51% from the prior quarter and up 372% year over year. Gross margin hit 84.6%, expanding from 26.2% in the year‑ago quarter.
The full year tells the same story at scale. Fiscal 2026 revenue rose 175% year over year to $20.25 billion, with datacenter revenue up 437%. A business that reported a GAAP loss in fiscal 2025 earned $70.88 per share, on a non‑GAAP (adjusted) basis, in fiscal 2026.
Management was specific about the source. About two‑thirds of the quarter’s sequential revenue growth came from higher pricing, with the other third from volumes.
The mix underneath echoed the industry data. Datacenter revenue more than doubled from the prior quarter to about $3 billion, as artificial intelligence (AI) buyers kept paying up.
However, consumer revenue went the other way, falling 32% sequentially to $556 million. Buyers who can walk away from record flash prices are starting to.
From 70% to 15%
That consumer retreat is exactly why TrendForce expects the curve to flatten. In its July survey, the firm said record‑high contract prices have consumer buyers in markets like PCs and smartphones reaching the limit of what they will pay, even as AI demand keeps overall supply tight.
Its projection of 10% to 15% NAND contract price growth this quarter compares with the 70% to 75% it projected for the quarter Sandisk just reported. The slowdown, notably, comes from demand hitting a ceiling rather than from new supply — capacity relief isn’t expected until the second half of 2027.
To be clear, that is a forecast of continued increases. But the rate of change arguably matters more than the direction here, because Sandisk’s sequential growth was two‑thirds pricing.
Run the math on the company’s own guidance and the deceleration is already visible. Sandisk guided for fiscal first‑quarter revenue of $10.3 billion to $10.8 billion. At the midpoint, that is 18% sequential growth, down from 51% last quarter.
Can the margins hold?
Guidance says yes, for now. Sandisk expects adjusted gross margin of 83% to 85% this quarter, essentially flat with the fourth quarter, and adjusted earnings per share of $44 to $46, up from $39.25.
The harder test comes after that. Shares trade near $1,600 as of this writing, about 32% below the high of $2,354.39 they set in June. That price works out to a forward price‑to‑earnings ratio of about 7.5. A multiple that low only looks cheap if the earnings projections behind it hold up — and those projections require the extraordinary margins to persist deep into fiscal 2027 while contract‑price growth shrinks toward 10%.
SanDisk has an answer it didn’t have in past memory cycles. The company has signed long‑term supply agreements with eight customers covering about half the bits it expects to ship in fiscal 2027, and those contracts are worth $93.9 billion at floor pricing (the minimum prices the contracts guarantee) over their life. Agreements like that could blunt the downside if market pricing eventually rolls over.
But the uncontracted half still floats on the market price, and how fast that price keeps climbing is exactly the forecast that just moved. A quarter ago, the industry’s reference projection had NAND prices rising 70%. Now it has them rising 10% to 15%.
That doesn’t end the boom, and the contracts make this cycle sturdier than the ones that wrecked memory stocks before. Still, Sandisk’s earnings estimates were built on the steep part of the price curve, and I think they will need rebuilding as it flattens — even if nothing else goes wrong.
