Market Overview - U.S. stock index futures are all down ahead of the market opening, with Dow futures down 0.09%, S&P 500 futures down 0.16%, and Nasdaq futures down 0.27% [1] - European indices also show declines, with Germany's DAX down 1.06%, UK's FTSE 100 down 0.85%, France's CAC40 down 0.62%, and the Euro Stoxx 50 down 0.91% [2][3] - WTI crude oil is up 0.98% at $60.01 per barrel, while Brent crude is up 0.90% at $63.95 per barrel [4] Investment Insights - JPMorgan sees market pullbacks as buying opportunities, maintaining a bullish outlook on U.S. stocks, expecting the S&P 500 to break the 7000-point mark in the short term, indicating a potential 3% increase from current levels [5] - Citigroup emphasizes that the fundamentals supporting the long-term bull market in stocks remain intact despite short-term market weakness, suggesting significant buying opportunities during pullbacks [6] - Nomura asserts that the AI narrative is entering a "second act" and is not in a bubble phase, indicating potential for further growth in AI stocks [7] Company News - Tesla's shareholders approved Elon Musk's $1 trillion compensation plan, with over 75% support, paving the way for Musk to potentially become the world's first trillionaire [8] - TSMC plans to raise prices for advanced process chips by 8%-10%, affecting major clients like Apple, particularly for processes at 5nm and below [9] - SanDisk reported a significant increase in operating profit by 878% in Q1, driven by strong demand from data center operations, with projected revenues for the next quarter exceeding analyst expectations [10] - MP Materials reported a Q3 revenue decline of 15% year-over-year, reflecting a strategic shift towards becoming a major U.S. rare earth supplier, with a projected start of commercial magnet sales by year-end [11] - Honda's Q2 profit fell short of expectations, down 25% year-over-year, leading to a 21% cut in its annual profit forecast due to import tariffs and one-time costs related to electric vehicles [11]

Market Overview - U.S. stock index futures are all down ahead of the market opening on November 7, with Dow futures down 0.09%, S&P 500 futures down 0.16%, and Nasdaq futures down 0.27% [1] - European indices also showed declines, with Germany's DAX down 1.06%, UK's FTSE 100 down 0.85%, France's CAC40 down 0.62%, and the Euro Stoxx 50 down 0.91% [2][3] - WTI crude oil increased by 0.98% to $60.01 per barrel, while Brent crude rose by 0.90% to $63.95 per barrel [3][4] Investment Insights - JPMorgan sees market pullbacks as buying opportunities, maintaining a bullish outlook on U.S. stocks, expecting the S&P 500 to break above 7000 points in the short term, indicating a potential 3% increase from current levels [5] - Citigroup also advocates for buying on dips, suggesting that the fundamentals supporting the AI narrative remain intact despite recent market corrections [6] - Nomura asserts that the AI narrative is entering a "second act" and does not believe a bubble has formed, indicating potential for further growth in AI stocks [7] Company-Specific News - Tesla's shareholders approved Elon Musk's $1 trillion compensation plan, with over 75% support, paving the way for Musk to potentially become the world's first trillionaire [8] - TSMC plans to raise prices for advanced process chips by 8%-10%, affecting major clients like Apple, particularly for processes at 5nm and below [9] - SanDisk reported a significant increase in operating profit by 878% in Q1, driven by strong demand from data center operators, with projected revenues for the next quarter exceeding analyst expectations [10] - MP Materials reported a Q3 revenue decline of 15% year-over-year, reflecting a strategic shift towards becoming a major U.S. rare earth supplier, with a projected start of commercial magnet sales by year-end [11] - Honda's Q2 profit fell short of expectations, down 25% year-over-year, leading to a 21% cut in its annual profit forecast due to import tariffs and one-time costs related to electric vehicles [11]

Core Insights - Demand for NAND flash products from SanDisk continues to exceed supply capabilities, a situation expected to persist until the end of 2026 and beyond [1] - SanDisk's CEO David Goeckeler noted a shift in customer contracts from traditional quarterly submissions to long-term contracts, with clients sharing demand forecasts for the entire year of 2027 [1] - Data centers are projected to become the largest source of demand for NAND flash, surpassing mobile devices for the first time in 2026, indicating a significant transformation in the NAND market [1] Financial Performance - SanDisk reported revenue of $2.308 billion for Q1 FY2026, representing a year-over-year growth of 23% and a quarter-over-quarter growth of 21%, with data center revenue increasing by 26% sequentially [3] - The proportion of BiCS8 in SanDisk's shipments was 15% in the first fiscal quarter, expected to dominate capacity by the end of the fiscal year [3] - For Q2 FY2026, SanDisk anticipates achieving approximately $2.6 billion in revenue [3]

Core Viewpoint - SanDisk (SNDK.US) reported Q1 FY2026 earnings that significantly exceeded Wall Street analysts' expectations, highlighting the ongoing demand surge for storage products driven by AI training and inference needs [1][3][5] Financial Performance - SanDisk's Q1 revenue reached $2.308 billion, a 23% year-over-year increase and a 21% quarter-over-quarter increase, surpassing the expected $2.1 billion [3][4] - The company's Non-GAAP adjusted earnings per share were $1.22, well above the previous quarter's $0.29 and the analysts' forecast of $0.89 [3] - Operating income surged to $176 million, reflecting an 878% quarter-over-quarter increase, while net income was approximately $112 million, a significant recovery from a loss of $23 million in the previous quarter [4][3] - Gross margin improved to 29.8%, up from 26.2% in the previous quarter [4] Market Position and Outlook - SanDisk, as a standalone entity since its split from Western Digital in 2025, has seen its stock price increase nearly 500% due to the unprecedented demand for storage driven by AI [2][5] - The company expects Q2 FY2026 revenue to be between $2.55 billion and $2.65 billion, exceeding the analysts' average estimate of $2.36 billion [5] - Analysts are optimistic about the storage sector, with Morgan Stanley and Bank of America raising their target prices for SanDisk significantly, indicating strong bullish sentiment [5] Industry Trends - The demand for enterprise SSDs is expected to grow significantly, with projections indicating a CAGR of over 35% from 2024 to 2030, particularly driven by AI inference and training workloads [7][10] - The AI infrastructure investment cycle is creating a "storage supercycle," benefiting major storage companies like SanDisk, Seagate, and Western Digital [10][11] - The integration of high-capacity enterprise SSDs in AI data centers is becoming critical, as they provide the necessary balance of throughput, latency, and energy efficiency for AI workloads [6][7]

Financial Data and Key Metrics Changes - The company reported revenue of $2.3 billion for Q1 FY 2026, representing a sequential increase of 21% and a year-over-year increase of 23% [4][12] - Non-GAAP earnings per share (EPS) were $1.22, up from $0.29 in the prior quarter, exceeding guidance of $0.70-$0.90 [15][22] - Non-GAAP gross margin for Q1 was 29.9%, up 350 basis points sequentially, compared to guidance of 28.5%-29.5% [15][12] - Adjusted free cash flow generated was $448 million, with a free cash flow margin of 19.4% [16][17] Business Line Data and Key Metrics Changes - Data Center Business revenue increased by 26% sequentially, reaching $269 million [14][7] - Edge revenue was $1,387 million, up 26% sequentially, driven by a PC refresh cycle and smartphone demand [14][8] - Consumer revenue was $652 million, up 11% quarter-over-quarter, supported by strong partnerships and product launches [14][10] Market Data and Key Metrics Changes - The company anticipates ongoing demand for NAND products to exceed supply through the end of calendar year 2026 and beyond [4][18] - Investments in data centers and AI infrastructure are expected to surpass $1 trillion by 2030, driving demand for high-capacity SSDs [6][10] - The average smartphone capacity per device is expected to grow in the high-single digits in calendar years 2025 and 2026 [8][10] Company Strategy and Development Direction - The company is focused on growing revenue, expanding margins, and generating sustainable free cash flow to create shareholder value [4][22] - Strategic allocation decisions are being made to maximize long-term value creation, with an emphasis on advancing the Technology Roadmap and strengthening customer partnerships [5][6] - The company aims to maintain a net cash position and continue investing in the business while returning cash to shareholders [19][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to create significant and sustainable value for customers and shareholders amidst robust demand [22][10] - The company is optimistic about the growth opportunities in the Data Center Business, with ongoing qualifications and strategic engagements with key hyperscale customers [22][7] - Management noted that the demand for products is expected to exceed supply beyond 2026, indicating a strong market outlook [18][19] Other Important Information - The company incurred $61 million in startup costs and $11 million in underutilization charges during the quarter [15][16] - The company plans to align its end market nomenclature to match industry standards, referring to data center, edge, and consumer segments [12][13] Q&A Session Summary Question: Are you seeing similar trends in NAND as in the HD world regarding customer engagement? - Management noted that customers are seeking long-term commitments and visibility into supply, indicating a shift from quarter-by-quarter deals to multi-quarter agreements [25][26] Question: How do you view the supply situation over the next couple of years? - Management indicated that the market is expected to remain undersupplied through 2026, with a focus on long-term demand trends [35][36] Question: What is the update on enterprise SSD qualifications and market share ambitions? - Management expressed satisfaction with the progress in enterprise SSD qualifications and anticipates increasing sales in this segment throughout FY 2026 [37][38] Question: How do you assess the enterprise SSD market opportunity relative to hard disk drives? - Management believes that both technologies will grow, with enterprise SSDs expected to grow faster due to increasing data storage needs [44][45] Question: Can you clarify the guidance for the upcoming quarter? - Management expects revenue growth to be driven primarily by pricing, with low-single-digit bid growth anticipated [92][93]

Financial Data and Key Metrics Changes - The company reported revenue of $2.3 billion for the first quarter, representing a sequential increase of 21% and a year-over-year increase of 23% [4][12] - Non-GAAP earnings per share (EPS) were $1.22, up from $0.29 in the prior quarter, exceeding guidance of $0.70-$0.90 [4][15] - Adjusted free cash flow generated was $448 million, with a free cash flow margin of 19.4% [4][17] - Non-GAAP gross margin for the first quarter was 29.9%, up 350 basis points sequentially, compared to guidance of 28.5%-29.5% [12][15] Business Line Data and Key Metrics Changes - Data center revenue increased by 26% sequentially to $269 million, driven by strong demand from hyperscale and OEM customers [12][14] - Edge revenue reached $1.387 billion, up 26% sequentially, supported by a PC refresh cycle and smartphone launches [12][14] - Consumer revenue was $652 million, up 11% quarter-over-quarter, with strong sales from partnerships in the gaming sector [12][14] Market Data and Key Metrics Changes - The data center market is expected to become the largest segment in NAND by 2026, with demand growth projected at mid-40% [38][46] - The company anticipates ongoing supply constraints, with demand expected to exceed supply through the end of 2026 and beyond [17][54] - The average smartphone capacity per device is expected to grow in the high single digits in 2025 and 2026, while PC unit shipments are projected to grow in low single digits [8][95] Company Strategy and Development Direction - The company is focused on growing revenue, expanding margins, and generating sustainable free cash flow to create shareholder value [4][19] - Strategic allocation decisions are being made to maximize long-term value creation, particularly in data centers and AI infrastructure [5][6] - The company is transitioning from a mobile-centric approach to a more diversified strategy that includes significant growth in the data center business [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to create significant and sustainable value for customers and shareholders, driven by strong execution and robust demand [10][22] - The company is optimistic about the long-term demand for NAND products, particularly in data centers, as customers seek higher performance solutions [9][45] - Management noted that the current market dynamics are favorable, with customers proactively seeking long-term commitments for supply [25][26] Other Important Information - The company achieved a net cash position of $91 million, six months ahead of target, driven by strong cash generation [4][16] - Capital expenditures for the quarter totaled $387 million, representing 16.8% of revenue, with plans to continue investing in the business [17][19] - The company is aligning its end market nomenclature to better match industry standards, referring to data center, edge, and consumer segments [12][13] Q&A Session Summary Question: Are you seeing similar trends in NAND as in the HD world regarding customer engagement and allocation? - Management noted that customers are seeking multi-quarter deals for certainty of supply, indicating a shift from short-term to longer-term agreements [25][26] Question: What is the outlook for bit shipment growth in 2025 and 2026? - Management expressed optimism about maintaining market share and growing the data center business through innovation and product qualifications [29][30] Question: How do you view the supply situation over the next couple of years? - Management indicated that the market is expected to remain undersupplied through 2026, with a focus on increasing productivity without adding wafer capacity [35][36] Question: What is the update on enterprise SSD qualifications and market share ambitions? - Management reported strong progress in enterprise SSD qualifications and expects sequential growth throughout FY2026, with increasing sales in this segment [37][38] Question: How does the enterprise SSD market opportunity compare to hard disk drives? - Management believes both technologies will grow, with enterprise SSDs expected to grow faster due to rising data demands driven by AI [44][46] Question: Can you clarify the guidance for the next quarter regarding pricing and bit growth? - Management expects revenue growth to be primarily driven by pricing, with low single-digit bid growth anticipated [92][93] Question: What is the status of the Ultra QLC 256 Terabyte product? - Management confirmed that the 128T product is under qualification and expected to ramp in mid-2026, with multiple customers involved [77][78]

Financial Data and Key Metrics Changes - SanDisk reported revenue of $2.3 billion for Q1 2026, representing a sequential increase of 21% and a year-over-year increase of 23% [3][11] - Non-GAAP earnings per share (EPS) for the quarter were $1.22, up from $0.29 in the prior quarter, exceeding guidance of $0.70-$0.90 [3][13] - Non-GAAP gross margin was 29.9%, up 350 basis points quarter-over-quarter, compared to guidance of 28.5-29.5% [11][13] - Adjusted free cash flow generated was $448 million, representing a free cash flow margin of 19.4% [15] Business Line Data and Key Metrics Changes - Data center revenue increased by 26% sequentially to $269 million, driven by strong demand from hyperscale and OEM customers [5][12] - Edge revenue reached $1,387 million, up 26% sequentially, supported by a PC refresh cycle and Windows 11 adoption [6][12] - Consumer revenue was $652 million, up 11% quarter-over-quarter, with strong sales from co-branded products like the Nintendo Switch 2 microSD Express card [9][12] Market Data and Key Metrics Changes - The data center market is expected to become the largest segment in NAND by 2026, with significant growth driven by AI and cloud demand [41][42] - Average smartphone capacity per device is projected to grow in the high single digits in 2025 and 2026, while PC unit shipments are expected to grow in low single digits [6][80] - Supply growth in the NAND market is anticipated to be around 17% in 2026, while constrained demand is expected to be mid-teens [49] Company Strategy and Development Direction - SanDisk is focused on growing revenue, expanding margins, and generating sustainable free cash flow, with a strong emphasis on technology advancement and customer partnerships [3][4] - The company is investing in data centers and AI infrastructure, with expectations of over $1 trillion in investments by 2030, creating a strong demand for high-capacity NAND products [4] - The BICS8 technology is expected to account for a majority of bit production by the end of fiscal year 2026, enhancing the company's position in data centers and edge markets [5][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued demand exceeding supply through the end of calendar year 2026 and beyond, with products currently on allocation across all end markets [16][17] - The company anticipates revenue for Q2 2026 to be between $2.55 billion and $2.65 billion, driven by double-digit price increases and mid-single digit bid growth [16][17] - Management highlighted the importance of long-term customer engagements and proactive demand visibility as a positive development in the current market [25][26] Other Important Information - SanDisk achieved a net cash position of $91 million, six months ahead of the target shared during the investor day in February [3][14] - The company plans to continue investing in the business while returning cash to shareholders, maintaining a disciplined capital allocation strategy [18][19] Q&A Session Summary Question: Are you seeing similar trends in NAND as in the HD world regarding customer engagement and allocation? - Management noted a shift towards multi-quarter deals with customers seeking certainty of supply, indicating a welcome development in the market [24][25] Question: What is the outlook for supply and capacity additions in the coming years? - Management indicated that the market is expected to remain undersupplied through 2026, with no immediate plans for additional capital investments [33][34] Question: How is the enterprise SSD market evolving relative to hard disk drives? - Management believes both technologies will grow, with enterprise SSDs expected to grow faster due to increasing data demands driven by AI [40][41] Question: Can you provide clarity on the portion of contracts that are shorter-term versus longer-term? - Currently, there are very few volume and price commitments beyond a quarter, but discussions for longer-term agreements are ongoing with strategic customers [52][53] Question: What is the expected growth in data center revenues and how much is driven by AI? - Management stated that the majority of data center revenue growth is AI-driven, with expectations for significant growth in the coming years [88]

Core Insights - SanDisk reported an adjusted EPS of $1.22, exceeding the consensus estimate of $1.02 [1] - The company achieved revenue of $2.31 billion, surpassing the expected $2.21 billion [1] Financial Performance - Adjusted EPS: $1.22 compared to a consensus estimate of $1.02, indicating a strong performance [1] - Revenue: $2.31 billion against an expectation of $2.21 billion, reflecting better-than-expected sales [1]

Financial Performance - Q1 2026 - Revenue reached $2.308 billion, a 21% increase quarter-over-quarter (QoQ) and a 23% increase year-over-year (YoY)[17] - Non-GAAP Gross Margin was 29.9%, up 3.5 percentage points QoQ but down 9 percentage points YoY[6, 17] - Non-GAAP Diluted Net Income per Share was $1.22, a 321% increase QoQ but a 33% decrease YoY[6, 17] - Adjusted Free Cash Flow was $448 million, a 482% increase QoQ and a 399% increase YoY[6, 17] Revenue by End Market - Q1 2026 - Datacenter revenue was $269 million, a 26% increase QoQ[15] - Edge revenue was $1.387 billion, a 26% increase QoQ[15] - Consumer revenue was $652 million, an 11% increase QoQ[15] Capital Expenditure - Total Sandisk Gross CapEx was $387 million, representing 16.8% of net revenue[18] - Total Sandisk Cash CapEx was $40 million, representing 1.7% of net revenue[18] Fiscal Second Quarter Guidance - Revenue is projected to be between $2.55 billion and $2.65 billion[20] - Non-GAAP Gross Margin is expected to be between 41% and 43%[20] - Non-GAAP Diluted Net Income per Share is projected to be between $3.00 and $3.40[20]

Revenue Performance - First quarter revenue was $2.31 billion, up 21% sequentially and 23% year-over-year, exceeding guidance[4] - The company expects second quarter revenue to be between $2.55 billion and $2.65 billion, with Non-GAAP diluted net income per share projected to be between $3.00 and $3.40[8] - Revenue for the three months ended October 3, 2025, was $2,308 million, a 22.5% increase from $1,883 million for the same period in 2024[20] Income and Profitability - GAAP net income for Q1 2026 was $112 million, a 587% increase from the previous quarter, with diluted net income per share at $0.75[5] - Operating income for Q1 2026 was $176 million, a significant increase of 878% from the previous quarter[5] - Gross profit decreased to $687 million, down 5.4% from $726 million year-over-year[20] - Operating income fell to $176 million, a decline of 39.5% compared to $291 million in the prior year[20] - Net income was $112 million, representing a 46.5% decrease from $211 million in the same quarter last year[20] - Non-GAAP net income increased to $181 million, compared to $263 million in the prior year, reflecting a 31.2% decline[26] Cash Flow - Cash flow provided by operating activities was $488 million, a significant improvement from a cash outflow of $131 million in the same quarter last year[26] - Free cash flow for the quarter was $438 million, compared to a negative $198 million in the same period last year[26] - Free cash flow is defined as cash flows from operating activities less purchases of property, plant, and equipment, net[34] - Adjusted free cash flow includes free cash flow plus activity related to Flash Ventures, net[34] - The company considers free cash flow and adjusted free cash flow as useful indicators for strategic opportunities[34] Expenses and Liabilities - Total current assets decreased to $4.98 billion from $5.09 billion in the previous quarter[18] - Total liabilities decreased to $3.37 billion from $3.77 billion in the previous quarter[18] - Research and development expenses increased to $316 million, up from $283 million year-over-year, indicating a focus on innovation[20] - Total operating expenses rose to $511 million, a 17.5% increase from $435 million in the same quarter last year[20] Business Developments - The company completed its separation from Western Digital Corporation on February 21, 2025, becoming a standalone publicly traded company[10] - Datacenter revenue increased by 26% sequentially, with two hyperscalers in qualification and engagement with five major hyperscale customers[4] - BiCS8 technology accounted for 15% of total bits shipped, expected to dominate bit production by the end of fiscal year 2026[4] - The company incurred $10 million in loss on business divestiture during the quarter, which is not indicative of ongoing operations[31]