Equity Research · Earnings Update
Sandisk Corp (SNDK)
Summary and key takeaways
Sandisk delivered a blowout fiscal Q3 2026 (quarter ended April 3, 2026): revenue of $5.95 billion, up 97% sequentially and 251% year-over-year, crushing guidance of $4.4–4.8 billion. Non-GAAP diluted EPS was $23.41 (GAAP $23.03), and non-GAAP gross margin came in at 78.4% against a guided 65–67% — a huge beat driven by both a mix shift toward higher-value enterprise/datacenter customers and continued NAND pricing strength. Datacenter revenue alone grew 233% year-over-year. The company also announced a $6 billion share buyback authorization alongside the print.
Results snapshot
| Metric | Guidance | Actual |
|---|---|---|
| Revenue | $4.4–4.8B | $5.95B (+251% YoY, +97% QoQ) |
| Non-GAAP gross margin | 65–67% | 78.4% |
| Non-GAAP diluted EPS | — | $23.41 |
| GAAP diluted EPS | — | $23.03 |
| Datacenter revenue growth (YoY) | — | +233% |
Analysis
This is the single largest position in the book (10.20%, and technically at its 10% single-name cap), and this quarter is the clearest evidence yet that the original spin-off thesis — storage as an underappreciated leg of the AI buildout — is playing out with real numbers, not just narrative. Gross margin at 78.4% against a 65–67% guide is an enormous beat for a historically commodity-priced memory business, and it signals NAND pricing power that's holding up far better than the market appears to have expected heading into the print.
The $6 billion buyback authorization is a meaningful capital-return signal for a company barely a year removed from being spun out of Western Digital — it says management sees the current cash generation as durable, not a one-quarter anomaly.
Guidance
- Fiscal Q4 2026 revenue: $7.75–8.25 billion (implies continued sequential acceleration)
- Fiscal Q4 2026 non-GAAP diluted EPS: $30.00–33.00
The Q4 guide midpoint of $8.0 billion would be roughly 35% sequential growth on top of an already-97%-sequential Q3 — an extraordinarily steep ramp that assumes NAND pricing strength continues virtually uninterrupted through the summer.
Updated investment thesis
SNDK remains the highest-conviction, and highest-risk-concentration, position in the book. The bull case — NAND pricing strength from AI-driven enterprise SSD demand, now independent of Western Digital's capital allocation — is being validated in real numbers each quarter. The bear case is unchanged and, if anything, sharper given the size of the beat: memory is a brutally cyclical commodity business, and a 78.4% gross margin quarter sets an extremely high bar that a NAND pricing correction would hit hard, both directly and through this position's outsized weight in the book.
No position changes from this report. SNDK sits right at its 10% single-position cap per the IPS, and this quarter's strength does not change that discipline.
Risks to this position
- Concentration risk: SNDK is 10.20% of the book, at or slightly over its policy cap, meaning a memory-cycle reversal would hit the portfolio harder here than anywhere else.
- Cyclicality risk: 78.4% gross margin is far above historical NAND-business norms and is unlikely to be sustainable indefinitely if industry supply responds to current pricing.
- Guidance risk: the Q4 guide assumes continued steep sequential growth; any moderation in NAND pricing would make the guide difficult to hit.
- Same-cluster risk: SNDK, MU, AMD, and INTC together remain the largest thematic cluster in the book per the July letter.
Sources & references
- Sandisk Reports Fiscal Third Quarter 2026 Financial Results — investor.sandisk.com, businesswire.com
- Sandisk Corp — SEC Form 8-K, FY2026
- Sandisk Q3 revenue shatters estimates as it surges 251% — Seeking Alpha
- Sandisk posts 251% Q3 revenue surge and $6B buyback — StockTitan