S&P upgrades SanDisk to BBB as AI memory demand drives cash flow past $23B

S&P Global Ratings has upgraded SanDisk Corporation's credit rating from BB+ to BBB, citing a surge in demand for memory chips driven by artificial intelligence. The agency highlighted the company's strong financial position, including a debt-free balance sheet and robust cash flow. SanDisk's revenue jumped by 175% in fiscal 2026 due to an imbalance in the global flash memory market, fueled by the growth in AI data center infrastructure.

The company is projected to double its revenue and surpass $23 billion in free cash flow by fiscal 2027, as it ramps up lower-cost technology and benefits from high-margin data center contracts with volume commitments and price protections. Although the memory market remains cyclical, SanDisk's conservative financial structure provides significant risk mitigation.

The company has already repaid its debt and maintains a net cash position, even as capital expenditures rise and excess capital is returned to shareholders. Long-term supply agreements with data center customers are expected to provide enhanced earnings visibility, with SanDisk's balance sheet remaining strong enough to navigate future market shifts.