Sandisk Locks In $93.9 Billion of Contracted NAND Revenue as Datacenter Bits Triple to 38% of Portfolio
Q4 FY2026 earnings call, August 5, 2026
Sandisk closed out fiscal 2026 with the kind of quarter that management has spent the past year building toward: record revenue, record gross margin, record earnings per share, and $4.5 billion of stock repurchased in a single quarter. But the headline for investors is not the print itself, it is the extent to which Sandisk has now formally restructured its customer relationships through long-term supply contracts, and how much revenue visibility that has created almost overnight.
New Business Models Now Total $93.9 Billion in Minimum Contracted Revenue
The centerpiece of the quarter is the rapid build-out of what Sandisk calls New Business Models, or NBMs, multiyear supply agreements with its largest customers. Having announced five NBMs on the April call, the company signed five more during the quarter, three with new customers and two expansions of existing deals, bringing the total to eight customers spanning Datacenter and Edge. CFO Luis Visoso disclosed that the total minimum revenue across all signed NBMs, assuming floor pricing, is $93.9 billion, with management explicitly stating it expects actual revenue to come in above that floor. Remaining performance obligation stood at $59.8 billion at quarter end, rising to $91.1 billion including the two deals signed after the quarter closed.
The contracts run up to five years with a weighted average duration exceeding four years, and are backed by $16.5 billion in financial guarantees, cash deposits and instruments held largely with third parties, designed to protect Sandisk if a customer fails to meet its purchase obligations. CEO David Goeckeler was direct about the purpose: "We don't ever expect to see that money, quite frankly. It's just to align interest." Management expects NBMs to represent more than 50% of bits in fiscal 2027 and approximately two-thirds in fiscal 2028, a level of forward commitment that did not exist in this industry a year ago.
Perhaps the more telling data point is that customers are already returning for more. Visoso noted that "these expansions reflect our customers' strengthening demand exceeding their prior estimates," and Goeckeler added that "some of our biggest customers are already coming back and wanting more, right, from just what they thought they needed 3 months ago." Both executives cautioned, however, that Sandisk intends to be selective from here, targeting roughly five-year durations, growing volume commitments and attractive financials rather than chasing every available deal.
Datacenter Mix Triples, NAND TAM Guided to $500 Billion in 2027
Datacenter now represents 38% of Sandisk's bit portfolio, up from roughly 12% a year ago, and is the company's fastest-growing end market. Fourth-quarter Datacenter revenue reached $2.977 billion, up 103% sequentially, while full-year Datacenter revenue hit $5.153 billion, up 437% year-over-year. Management now expects the NAND industry to exceed $300 billion in revenue in calendar 2026, roughly three times last year's level, and to approach $500 billion in calendar 2027, with Datacenter's share of total NAND TAM expanding from about 30% in 2025 to roughly 50% in 2026 and continuing to outpace the broader market into 2027. Sandisk said it intends to hold segment share within that growth rather than aggressively outgrow or undergrow the market.
Management was unambiguous that supply will remain the binding constraint. "Demand from our customers is growing faster than our supply," Visoso said, adding that bits are expected to remain on allocation beyond calendar 2027. Sandisk grows supply primarily through nodal transitions on its BiCS architecture rather than adding wafer capacity, a structural choice the company argues keeps capital intensity declining as a percentage of revenue even as spending rises in absolute dollars to fund the BiCS 8 and BiCS 10 ramps.
Margins, Buybacks, and a $15.5 Billion Repurchase Runway
Fourth-quarter non-GAAP gross margin came in at 84.6%, up from 78.4% in the prior quarter and just 26.4% a year ago, ahead of the 79% to 81% guidance range. Non-GAAP EPS reached $39.25, up from $23.41 sequentially and from $0.29 a year earlier, comfortably above the $30 to $33 guided range. For the first quarter of fiscal 2027, Sandisk guided revenue of $10.3 billion to $10.8 billion, gross margin of 83% to 85%, and EPS of $44 to $46.
Management confirmed that NBM pricing, which blends fixed and variable components with floors and ceilings, is being struck at roughly 80% gross margin, even at floor pricing, with upside if market prices continue rising. Goeckeler framed the mid-80s margin level as "a fair return" that balances profitability against the priority of durability and visibility: "We want to get this kind of boom and bust out of it. It doesn't work for anybody."
On capital return, the board authorized an additional $14 billion in buybacks, bringing total remaining authorization to $15.5 billion, following $4.5 billion repurchased in the fiscal fourth quarter alone. Visoso reiterated that buybacks, not dividends, remain the preferred capital return vehicle for now, calling them "more tax efficient and probably the right thing for us to do at this point in time," while stressing that reinvestment in the business and maintaining a net cash balance sheet remain the top two priorities ahead of shareholder returns.
Edge Markets Adjusting, Consumer Softer, HBF and KV-Cache Still Developing
Away from Datacenter, the Edge business, spanning smartphones, PCs and tablets, is working through what management describes as a demand adjustment rather than a downturn. Goeckeler said unit volumes in both smartphones and PCs are expected to fall in the mid-teens percentage range this calendar year, partially offset by rising storage content per device, with both markets expected to stabilize and return to unit growth in calendar 2027. Consumer revenue fell 32% sequentially to $556 million in the quarter, which management attributed to the slower pace at which consumer pricing can adjust relative to faster-moving enterprise and hyperscale markets, rather than to any deliberate allocation shift away from the segment.
On next-generation technology, Sandisk continues to develop high-bandwidth flash, or HBF, first announced roughly 18 months ago, and jointly standardized with SK Hynix, alongside ongoing work on KV-cache architectures for large language model inference. Goeckeler declined to give a specific timeline for HBF samples or shipping dates, saying only that the company has moved "an enormous distance" from an early research concept and would share more detail at its Investor Day in New York the following week. He was more expansive on the strategic logic behind staying close to hyperscale customers on architecture decisions, noting that "customers are driving the requirements in this market. It's not what the suppliers are coming up with," and that Agentic AI is acting as "a big multiplier" on NAND requirements as context lengths and model sizes grow.