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]

Core Insights - SanDisk Corporation (NASDAQ:SNDK) is set to release its first-quarter earnings results on November 6, with analysts predicting earnings of 89 cents per share and revenue of $2.15 billion [1] Company Performance - In the previous quarter, SanDisk reported better-than-expected results, leading to an 11.3% increase in share price, closing at $216.50 [1] Analyst Ratings - Morgan Stanley analyst Joseph Moore maintained an Overweight rating and raised the price target from $96 to $230 [4] - Mizuho analyst Vijay Rakesh maintained an Outperform rating and increased the price target from $180 to $215 [4] - Citigroup analyst Asiya Merchant maintained a Buy rating and raised the price target from $125 to $150 [4] - Wells Fargo analyst Aaron Rakers maintained an Equal-Weight rating and boosted the price target from $50 to $115 [4] - Benchmark analyst Mark Miller maintained a Buy rating and increased the price target from $85 to $125 [4]

Core Viewpoint - The demand for AI data centers is driving a reevaluation of the storage industry, leading several Wall Street investment banks to significantly raise their target prices for NAND supplier SanDisk [1][4]. Group 1: Target Price Adjustments - Bank of America Merrill Lynch raised SanDisk's target price from $125 to $230, maintaining a buy rating, citing a need to reassess the company's price-to-book ratio to 3-4 times [1]. - Mizuho Securities increased SanDisk's target price from $180 to $215, keeping an outperform rating [1]. - Jefferies raised SanDisk's target price from $60 to $180, also maintaining a buy rating [1]. Group 2: Financial Projections - Bank of America revised SanDisk's fiscal year 2026 EPS forecast from $6.93 to $8.00, a 15.4% increase, and revenue expectations from $8.91 billion to $9.17 billion, a 2.9% increase [1]. - The firm anticipates a 16% compound annual growth rate for SanDisk's revenue from fiscal years 2025 to 2028, with EPS expected to grow over five times during the same period [1][4]. Group 3: Market Dynamics - The data center segment accounted for approximately 12% of SanDisk's revenue in the first half of fiscal year 2025, doubling from 6% year-over-year [3]. - Enterprise SSD (eSSD) products are becoming the core growth engine for SanDisk, with eSSD margins nearing 50%, expected to contribute nearly one-third of total gross profit [3]. - The ongoing shortage of HDDs is driving demand for eSSD products, which is expected to support pricing resilience despite overall NAND average selling prices facing downward pressure [3][4]. Group 4: Supply and Demand Imbalance - The current AI data center construction boom and shortages in NAND and HDD are pushing manufacturers' gross margins to historical highs [4]. - Bank of America expects SanDisk's stock to be revalued to at least 3-4 times its book value, based on a strong storage cycle [4]. - The firm has raised EPS forecasts for fiscal years 2027 and 2028 to $14.38 and $16.04, respectively, significantly above previous estimates [4]. Group 5: Industry Outlook - Mizuho and Jefferies both express confidence in SanDisk's resilience in NAND pricing, anticipating sales and margin improvements in 2026 due to limited supply [5]. - The storage industry is expected to continue benefiting from AI growth, with increasing demand for high-capacity storage solutions [5].

Core Viewpoint - Bank of America has shown renewed optimism regarding Sandisk's future, maintaining a "buy" rating and increasing its price target significantly from $125 to $230 per share [1] Company Summary - Sandisk is a flash memory manufacturer that is currently viewed positively by Bank of America, indicating strong potential for growth and investment [1] Industry Summary - The flash memory market is likely to benefit from the positive outlook expressed by major financial institutions, suggesting a favorable environment for companies like Sandisk [1]

Core Viewpoint - The U.S. storage sector stocks experienced a significant surge, driven by SK Hynix's successful negotiations with NVIDIA regarding the pricing of the sixth-generation high bandwidth memory (HBM4), which increased by over 50% to approximately $560 per unit [1] Group 1: Stock Performance - Major storage stocks such as Seagate Technology (STX.US) and SanDisk (SNDK.US) rose by over 9%, while Micron Technology (MU.US) increased by nearly 8%, and Western Digital (WDC.US) saw a rise of over 5% [1] Group 2: SK Hynix's Market Position - SK Hynix has strengthened its dominant position in the high-end storage chip market by successfully negotiating a price increase for HBM4, which is expected to lead to a record operating profit of over 70 trillion Korean Won next year [1] Group 3: Pricing Dynamics - Initially, NVIDIA resisted the significant price hike due to potential competition from Samsung and Micron, but ultimately agreed to the price set by SK Hynix at approximately $560 per unit [1] - A SK Hynix executive indicated that advancements in technology and increased input costs justified the substantial price increase for HBM4 [1]

Core Viewpoint - Increasing acceptance of the semiconductor storage supercycle concept, but ongoing controversies exist regarding demand, supply, and valuation of SanDisk, with Morgan Stanley maintaining a bullish outlook despite removing its "preferred" designation due to the need for profit growth to align with current stock prices [1] Group 1: Demand Growth and Shipment Impact - Morgan Stanley projects a 20-25% growth in industry bit output next year, the highest in recent years, with SanDisk expected to grow in line with this, and potentially outperform the industry due to new QLC products and flexible supply [1] - By 2026, AI and data centers are anticipated to significantly contribute to NAND industry growth, with enterprise SSDs expected to see a 40-50% year-on-year increase [1] Group 2: NAND Supply Growth Outlook - NAND supply growth is expected to be constrained in 2026, with SanDisk and Kioxia's joint venture being one of the few potential new wafer capacity sources [2] - Positive factors include limited investment in the first half of 2026, with significant spending recovery anticipated in the second half of 2026, aligning with comments from key semiconductor equipment suppliers [2] Group 3: Profitability Outlook and Trading Range - SanDisk's profitability is expected to improve significantly, with projected earnings per share of $16.35 in 2026, and potential peak earnings of $30 per share during this cycle [3] - In a baseline scenario, a 15% bit growth is expected in 2026, with a 12% decrease in unit bit costs and a 14.4% increase in pricing, supporting a gross margin of 45.7% [3] - In an optimistic scenario, revenue could reach $13.1 billion with a gross margin of 50.3% and earnings per share of $26.26, with potential for earnings to exceed $30 if margins reach the mid-50% range [3] Group 4: Product Portfolio Concerns - SanDisk's exposure in the enterprise SSD market is low, with only 12% of bit share in Q2, despite high demand for enterprise SSDs [4] - The company has lagged in the enterprise SSD sector but maintains stable bit share excluding Yangtze Memory Technologies, with potential for accelerated growth as production ramps up [4] Group 5: Long-term Growth Potential - The ability of NAND to leverage AI for profit and valuation expansion remains uncertain, with the need for enterprise SSDs to confirm their role as structural replacements for hard drives to strengthen long-term bullish logic [5] - The growth momentum needs to expand beyond single terminal markets, as NAND still heavily relies on smartphones and PCs, necessitating broader market participation to sustain demand cycles [6] Group 6: Price Target Adjustments - The target price for SanDisk has been raised to $230, with an optimistic scenario target of $300, reflecting an estimated price-to-earnings ratio of approximately 32 times based on historical earnings [6]

Core Viewpoint - Increasing acceptance of the semiconductor storage supercycle concept, but ongoing controversies exist regarding demand, supply, and valuation of SanDisk [1] Group 1: Demand Growth and Impact on Shipments - Morgan Stanley projects a 20-25% growth in industry bit growth next year, the highest in recent years, with SanDisk expected to grow in line with this [2] - By 2026, AI and data centers are anticipated to significantly contribute to NAND industry growth, with enterprise SSDs expected to see a 40-50% year-on-year increase [2] Group 2: NAND Supply Growth Outlook - NAND supply growth is expected to be constrained in 2026, with SanDisk and Kioxia's joint venture being one of the few potential new wafer capacity sources [2] - Equipment manufacturers indicate limited investment in the first half of 2026, with significant spending recovery expected in the second half of 2026 [2] Group 3: Profitability Outlook and Trading Range for SanDisk - SanDisk's earnings are projected to significantly improve, with an estimated EPS of $16.35 in 2026, and a peak EPS potentially reaching $30 [4] - In a baseline scenario, a 15% bit growth is expected in 2026, with a 12% year-on-year decrease in unit bit costs and a 14.4% increase in pricing [4] Group 4: Product Portfolio Concerns - SanDisk's exposure in the enterprise SSD market is relatively low, with only 12% of bits in Q2, which may hinder revenue growth compared to competitors [5] Group 5: Valuation and Target Price Adjustment Logic - The potential for NAND to drive profitability and valuation expansion similar to DRAM hinges on confirming enterprise SSDs as structural replacements for hard drives [6] - Target price raised to $230, with an optimistic scenario target price of $300, based on historical EPS averages [7]

Summary of SanDisk Corporation Conference Call Company Overview - **Company**: SanDisk Corporation (SNDK.O) - **Industry**: Semiconductors - **Market Cap**: $28.803 billion - **Current Stock Price**: $199.33 (as of October 31, 2025) - **Price Target**: Raised from $96.00 to $230.00 Key Points and Arguments 1. **NAND Market Dynamics**: The NAND cycle is still in its early stages, with a severe supply-demand imbalance in storage, including HDDs. Limited clean room space and a focus on DRAM investments by suppliers are significant factors affecting NAND expansion [4][34][41] 2. **Earnings Growth Outlook**: EPS is projected to reach $16.35, with a potential bull case of $30+ in earnings power. The current stock price reflects a 21x consensus CY26 EPS [2][11][45] 3. **Product Launches**: The introduction of new eSSD products based on the BiCS8 process is expected to be a key catalyst for market share gains in the enterprise SSD sector, although visibility remains limited [5][28] 4. **Pricing Trends**: Industry-wide pricing for NAND is expected to increase by 10-15% in Q4 and Q1, supporting higher stock prices. SanDisk's pricing is projected to rise by 4% in Q3 and 6% in Q4 [4][14][17] 5. **Demand Growth**: Bit growth for 2026 is anticipated to reach 20-25%, driven by strong demand in the eSSD market, particularly from hyperscalers [21][22] 6. **Supply Constraints**: Limited supply growth is expected in 2026, with the SanDisk-Kioxia joint venture being one of the few sources of new wafer capacity. This is likely to keep NAND pricing constructive [34][35] 7. **Market Positioning**: SanDisk's exposure to consumer and PC markets is high, while its share in the eSSD market is low (12% of bits in Q2). The company aims to increase its presence in the eSSD market [28][52] 8. **Valuation Metrics**: The price target of $230 is based on a 20x through-cycle EPS of $11.50, reflecting a discount to the 22x multiple target for Micron. The bull case suggests a price target of $300 based on higher earnings power [55][62] Additional Important Insights - **Inventory Management**: Inventory levels are reported to be healthy, with significant reductions in NAND inventory noted by major players like Samsung [27] - **Risks and Concerns**: The company faces risks related to its lower exposure to the eSSD market and potential challenges in gaining market share in this segment [52][54] - **Long-term Outlook**: The long-term growth potential hinges on the ability to penetrate the eSSD market and the overall demand from PC and smartphone markets [54][55] This summary encapsulates the critical insights from the conference call regarding SanDisk Corporation's current market position, future outlook, and strategic initiatives within the semiconductor industry.

Core Viewpoint - Morgan Stanley has raised its price target on SanDisk to $230 from $96, maintaining an Overweight rating due to favorable industry pricing trends and upcoming product launches that could drive further upside [1] Group 1: Price Target and Rating - Morgan Stanley increased the price target for SanDisk to $230 from $96 while keeping an Overweight rating [1] - The near-term risk-reward profile has become more balanced as shares have risen, but the firm remains bullish in the long term [2] Group 2: Industry Trends and Pricing - NAND pricing has increased by 10–15% or more in both the fourth and first quarters, supporting expectations for several quarters of upward revisions [2] - The report indicates that NAND supply growth remains constrained, with demand heavily reliant on the PC and mobile markets, where the firm has lower conviction compared to datacenter demand [4] Group 3: Product Launch and Market Share - The upcoming launch of SanDisk's new enterprise eSSD products built on the BiCS8 process is seen as a potential catalyst for market share gains [3] - Despite strong technical specifications, visibility remains limited, and performance proof points will be crucial for sustaining momentum [3] Group 4: Valuation and Investor Confidence - SanDisk is trading at approximately 21 times projected 2026 earnings, indicating that investor confidence in the company's through-cycle earnings power and industry longevity will be essential for further multiple expansion [4]