Data Centers Now Deliver a Third of Sandisk's Revenue -- $2.98 Billion in a Single Quarter

Sandisk, a company known for its memory cards and flash drives, has shifted its focus and business model significantly. In its fiscal fourth quarter of 2026, the company reported generating $2.98 billion in revenue from datacenter customers, accounting for about a third of its $8.97 billion in total revenue for the quarter. This marks a substantial increase from just $213 million in quarterly sales a year earlier.

Furthermore, Sandisk's datacenter business grew by 437% in fiscal 2026, its first full year operating independently after separating from Western Digital, generating $20.25 billion in revenue, up 175% from the previous year. This shift is not just about who is buying Sandisk's storage, but how they are purchasing it. Datacenter revenue has been increasing for three consecutive quarters, rising from $440 million in the second quarter to $2.98 billion in the fourth.

Despite this, the company's consumer products, including flash storage for PCs, smartphones, gaming consoles, and cars, contributed only $556 million, or 6% of the revenue. Sandisk's answer to fluctuating memory pricing is the New Business Model (NBM), which involves multiyear supply agreements with large datacenter and edge customers.

These contracts, which last up to five years on average, provide a minimum of $93.9 billion in expected revenue, backed by $16.5 billion in customer cash deposits and financial instruments. The company expects these agreements to cover about half of its shipments in fiscal 2027 and two-thirds by fiscal 2028. While Sandisk's financials have improved dramatically, with gross margins reaching 84.6% and net income increasing to $6.9 billion in fiscal 2026, the market remains cautious.

The company's shares have declined by about 35% from their 52-week high, trading around $1,537 as of this writing. The price-to-earnings multiple has also fallen to around 7, considering the expected earnings for fiscal 2027. Despite this, Sandisk appears to have transformed into a different company, with a third of its revenue now coming from datacenters and over half of its shipments already committed under contracts.

However, the new business model has not yet been tested by a downturn, and the long-term financial model suggests that the current boom in prices may not be permanent.