Can SanDisk Avoid the Memory Trap That’s Burned Investors Before?

SanDisk and Kioxia are committing $31 billion to expand NAND flash capacity, backed by $91 billion in contracted customer demand. This investment aims to meet the growing needs of the AI era, with a new facility in Japan set to produce tenth-generation BiCS Flash. CEO David Goeckeler highlights that revenue visibility has expanded from three months to over four years, a significant improvement from previous years.

The company has signed agreements with eight data center and edge customers, with a weighted average duration of over four years, providing a strong foundation for the expansion. SanDisk's backlog is substantial, with remaining performance obligation reaching $91.1 billion, supported by $16.5 billion in customer financial guarantees.

The company's financials show a strong performance, with fiscal fourth-quarter revenue up 371.59% year over year and non-GAAP EPS of $39.25. With a forward P/E near 23x, SanDisk is priced for strong NBM economics, not for a return to spot NAND volatility. The risks lie in the potential for a structural memory shortage that may not ease before 2028, but SanDisk's expansion into already contracted demand provides a defensible position.