Highlights

  • Sandisk reported Q3 FY2026 revenue of $5.95 billion, up 251% year over year and 97% sequentially, exceeding guidance as datacenter flash demand drove Datacenter segment revenue of $1.47 billion, up 645% year over year.
  • Gross margin reached 78.4% in Q3 FY2026, a substantial improvement from 50.9% in Q2 FY2026, reflecting pricing strength in AI-driven storage markets and a shift toward higher-value product mix.
  • Non-GAAP diluted EPS reached $23.41 in Q3 FY2026, with free cash flow of $2.99 billion and an adjusted free cash flow of $2.96 billion in the quarter, demonstrating strong earnings conversion.
  • Q4 FY2026 guidance calls for revenue of $7.75 to $8.25 billion with non-GAAP EPS of $30.00 to $33.00, representing further acceleration as multi-year New Business Model agreements with major customers contribute volume.

Sandisk (NASDAQ:SNDK) delivered results for its fiscal third quarter of 2026 that redefined expectations for what a NAND flash storage company can achieve when the AI infrastructure cycle aligns with product capability and customer commitment structures. Revenue of $5.95 billion for the quarter ended 3 April 2026 was up 251% year over year and 97% sequentially — growth rates that reflect not just pricing and volume recovery but a fundamental repositioning of Sandisk's flash storage products as infrastructure-grade components within AI data centres. With gross margin of 78.4%, the company converted that revenue surge into substantial profit generation.

Datacenter Segment Leads a Broad-Based Revenue Surge

Datacenter segment revenue of $1.47 billion in Q3 FY2026 grew 645% year over year and 233% sequentially, driven by AI infrastructure investments by hyperscale cloud providers that require high-density, high-endurance NAND flash for AI model checkpointing, training data pipelines, and inference workloads. The disproportionate growth of the Datacenter segment confirms that AI workload characteristics — which demand both high throughput and large-capacity storage — are creating a new demand profile for enterprise-grade NAND that differs fundamentally from prior data centre storage cycles.

Edge segment revenue of $3.66 billion grew 295% year over year and 118% sequentially, reflecting both continued NAND adoption in mobile, PC, and consumer electronics — where AI-capable device specifications drive higher storage content per unit — and the expansion of AI-at-the-edge deployments that require local flash storage for inference workloads. Consumer segment revenue of $820 million grew 44% year over year, while declining 10% sequentially as the quarter's demand composition shifted toward higher-margin commercial categories.

New Business Model Agreements Provide Long-Term Visibility

Sandisk disclosed that three New Business Model agreements — multi-year customer engagements backed by firm financial commitments — were signed with major customers by the end of Q3 FY2026, with two additional NBM agreements signed in fiscal Q4, bringing the total to five as of the date of the earnings release. Management described the NBM structure as providing Sandisk with long-term revenue visibility while offering customers supply commitments and pricing stability for critical storage infrastructure. These agreements are expected to contribute meaningfully to revenue in future quarters as volume commitments are fulfilled.

Cash Flow Generation and Balance Sheet

Free cash flow of $2.99 billion in Q3 FY2026, and adjusted free cash flow of $2.96 billion, underscore the operating leverage inherent in flash storage economics at current pricing and volume levels. Cash and equivalents stood at $3.74 billion at the end of Q3 FY2026, with the company having fully retired its long-term debt during the fiscal year. The combination of a clean balance sheet and sustained free cash flow generation has enabled Sandisk to consider returning capital to shareholders — the company announced a $6 billion share repurchase programme during the period.

Q4 FY2026 Guidance and Strategic Direction

For the fourth fiscal quarter of 2026, Sandisk guided revenue of $7.75 billion to $8.25 billion, representing further sequential growth from the Q3 record. Non-GAAP EPS guidance of $30.00 to $33.00 and gross margin guidance of approximately 79% to 81% confirm management's expectation that the strong AI storage demand environment will persist through the end of the fiscal year. Capital expenditure is expected to remain managed relative to revenue, with Sandisk's fabless and partially outsourced manufacturing model providing flexibility without requiring proportionate capex growth at the pace of revenue.

Stock Price Information

Sandisk (NASDAQ:SNDK) traded at $80.91 on 29 October 2026, representing a gain of 7.15% on the day, on volume of 4.98 million shares.