SanDisk shares continued their impressive rally on Tuesday, climbing 9.3% to $1,372.33, as investors cheered the company's fiscal third-quarter results that showcased the powerful impact of AI-driven demand for storage. The stock touched an intraday high of $1,397.08, extending a year-to-date surge that has been among the most notable in the AI hardware space.
The company reported fiscal Q3 revenue of $5.95 billion, a 97% sequential increase and a staggering 251% jump compared to the same period last year. GAAP net income reached $3.62 billion, or $23.03 per share, while non-GAAP earnings came in at $23.41 per share. The standout segment was data-center revenue, which soared 233% quarter-over-quarter to $1.47 billion, underscoring the insatiable appetite for NAND flash memory in AI workloads.
Long-Term Deals Signal a Strategic Shift
During the quarter, SanDisk signed five long-term supply agreements, including three that closed before the quarter ended and two added shortly after. CFO Luis Visoso revealed on the earnings call that these deals carry financial guarantees exceeding $11 billion and now cover more than a third of the company's projected memory shipments for fiscal 2027. The agreements, ranging from one to five years, are designed to provide revenue visibility and protect SanDisk if customers fail to meet purchase commitments.
CEO David Goeckeler described the quarter as a "fundamental inflection point," emphasizing that SanDisk is pivoting toward "the highest-value end markets, led by Datacenter." The company's forward guidance for fiscal Q4 projects revenue between $7.75 billion and $8.25 billion, with adjusted earnings per share in the range of $30 to $33.
Earnings Call Warning: Price Growth May Be Slowing
Despite the blockbuster results, analysts on the earnings call flagged a potential headwind. Bernstein analyst Mark Newman pointed out that the guidance "does imply that the rate of price increase is slowing a bit," questioning whether the long-term agreements were a factor. Goeckeler countered that SanDisk does not forecast prices, but acknowledged that after "extraordinary pricing acceleration," the market remains "extremely dynamic."
A Seeking Alpha analysis noted that the quarter's beat was driven entirely by price and product mix, not by higher unit volumes. In fact, bit shipments declined in the high teens sequentially. The report also warned that the stock's technical indicators appear stretched, and the new long-term contracts could cap upside if spot NAND prices continue to climb.
Wall Street Reacts with Mixed Conviction
While analysts have raised price targets—Fox Advisors to $1,500 and Bernstein to $1,700—some market participants remain cautious. Michael Ashley Schulman, a partner at Cerity Partners, told Reuters that both SanDisk and Western Digital are failing to deliver the "wow factor" needed to push stocks higher from current levels, given their already substantial runs.
Rival storage companies also benefited from the AI narrative. Western Digital shares rose 8.3% and Seagate gained 6.1% on Tuesday, as both flagged AI-driven demand strength. However, SanDisk's elevated valuation leaves little room for error if the memory cycle turns.
