Key Highlights 

  • SanDisk reported fiscal Q2 2026 revenue of USD 3,025 million, rising 31% quarter over quarter and 61% year over year. 
  • Non-GAAP EPS reached USD 6.20, exceeding company guidance amid stronger NAND pricing across segments. 
  • Non-GAAP gross margin expanded to 51.1%, compared with 29.9% in the previous quarter. 
  • Data center revenue increased 64% sequentially, supported by accelerating enterprise SSD demand linked to AI infrastructure. 
  • Fiscal Q3 2026 guidance signals continued momentum with revenue expected between USD 4.4 billion and USD 4.8 billion. 

SanDisk Fiscal Q2 2026 Revenue Surpasses Guidance 

SanDisk Corporation reported strong financial performance in fiscal Q2 2026, as pricing recovery across the NAND market and rising demand from artificial intelligence infrastructure supported growth across its end markets. 

Revenue for the quarter reached USD 3,025 million, representing a 31% sequential increase and 61% year over year growth. The result exceeded the company’s earlier guidance range of USD 2,550 million to USD 2,650 million. 

The upside primarily attributed to stronger pricing across NAND segments combined with steady bit shipment growth. Unit bit shipments increased 22% year over year and rose slightly sequentially, reflecting both rising demand and tight industry supply conditions. 

Artificial intelligence infrastructure expansion continues to reshape storage demand patterns. According to management commentary, AI workloads are increasing the storage content required across computing systems, reinforcing NAND flash memory as a foundational component of modern digital infrastructure. 

Margin Expansion Reflects Strong Pricing Environment 

The company also reported significant improvement in profitability during the quarter. 

Non-GAAP gross margin expanded to 51.1%, compared with 29.9% in the prior quarter, and exceeded management guidance of 41% to 43%. Higher segment pricing and expected cost reductions contributed to the margin expansion. 

Non-GAAP operating margin rose sharply to 37.5%, up from 10.6% in the previous quarter. 

Operating expenses came in lower than expected. Non-GAAP operating expenses totaled USD 413 million, representing 13.7% of revenue, below the guidance range of USD 450 million to USD 475 million. 

The lower expense base partly reflected a nonrecurring benefit of approximately USD 35 million related to changes in the accounting treatment of qualification units. 

Supported by revenue growth and cost discipline, non-GAAP EPS rose to USD 6.20, compared with USD 1.22 in the prior quarter and well above the guided range of USD 3.00 to USD3.40. 

Data Center Demand Accelerates with AI Expansion 

The company’s data center segment recorded the strongest growth during the quarter as AI-driven infrastructure spending accelerated. 

Data center revenue reached USD 440 million, increasing 64% sequentially. Demand was primarily driven by enterprise solid-state drives used in large-scale cloud and enterprise deployments. 

Enterprise SSDs are increasingly central to AI architectures, particularly as inference workloads expand and require higher storage capacity. 

The company also reported progress in qualifying its PCIe Gen 5 TLC enterprise SSD drives with hyperscale customers. In addition, the next-generation Bix 8 QLC storage platform, code-named ‘Stargate’, is progressing through final qualification stages and is expected to begin generating revenue shipments in the coming quarters. 

These developments reflect broader industry trends in which AI infrastructure buildouts are driving structural demand for advanced storage technologies. 

Growth Across Edge and Consumer Markets 

Beyond the data center segment, SanDisk also recorded strong performance across edge and consumer markets. 

Edge revenue reached USD 1,678 million, rising 21% sequentially. Demand from PC and mobile device manufacturers increased as AI-enabled applications drove higher storage configurations in end devices. 

The consumer segment generated USD 907 million in revenue, representing 39% sequential growth. The improvement attributed to stronger product mix and demand for premium storage products. 

During the quarter, the company introduced the SanDisk Extreme Fit USB-C flash drive, designed to expand storage capacity for personal computing and mobile devices. 

The company also rebranded its NVMe SSD product lineup under the SanDisk Optimus brand to strengthen positioning in gaming and creator segments. 

Additionally, licensing partnerships with global brands including Crayola and FIFA supported brand-driven consumer product initiatives. 

Strong Cash Generation and Balance Sheet Improvement 

Cash generation remained robust during the quarter. 

The company reported adjusted free cash flow of USD 843 million, representing a 27.9% free cash flow margin. Operating cash flow totaled USD 1,019 million, partially offset by USD 176 million in net capital spending. 

Gross capital expenditures were USD 525 million, equivalent to 8.4% of revenue, as the company continued investing in advanced NAND manufacturing technologies and product development. 

SanDisk ended fiscal Q2 2026 with USD 1,539 million in cash and cash equivalents and USD 603 million in total debt. 

During the quarter, the company repaid USD 750 million of debt, leaving it with a net cash position of USD 936 million. 

The capital allocation priorities remain focused on funding technology innovation, maintaining financial flexibility, and further strengthening the balance sheet. 

Long-Term Supply Agreements Emerging in NAND Market 

A strategic theme highlighted during the earnings call was the gradual emergence of long-term supply agreements (LTAs) in the NAND market. 

Historically, NAND pricing has largely been negotiated on a quarterly basis. However, the rapid expansion of AI infrastructure demand is encouraging customers to pursue multi-year agreements covering supply commitments and pricing frameworks. 

The company has already signed one such agreement, which includes a prepayment component, while additional negotiations remain underway. 

These developments may gradually reduce the historical cyclicality of the NAND market by providing better demand visibility and planning certainty for both suppliers and large-scale customers. 

Fiscal Q3 2026 Outlook Signals Continued Momentum 

Looking ahead, SanDisk expects further improvement in fiscal Q3 2026. 

The company forecast revenue between USD 4.4 billion and USD 4.8 billion, reflecting continued strong pricing conditions and demand for storage solutions. 

Non-GAAP gross margin is expected to increase further to between 65% and 67%, while non-GAAP EPS is projected between USD 12 and USD 14, based on approximately 157 million diluted shares. 

The demand across the NAND market continues to exceed available supply, particularly in AI-related applications. 

Although bit shipments are expected to decline mid-single digits sequentially due to seasonal factors, stronger pricing and favorable product mix are expected to continue supporting revenue and profitability. 

Risks and Industry Considerations 

Despite strong momentum, certain risks remain. 

Supply constraints continue to limit the company’s ability to fully meet customer demand. The company was unable to fulfill all customer orders during the quarter. 

In addition, NAND markets historically remain cyclical due to supply expansions and pricing fluctuations. Future capital investment decisions will depend on confidence in sustained demand and pricing durability. 

Finally, the long-term pace of AI infrastructure investment remains linked to broader technology spending cycles and macroeconomic conditions. 

FAQs 

  1. What were SanDisk’s key financial results in fiscal Q2 2026? 
    SanDisk reported revenue of USD 3,025 million and non-GAAP EPS of USD 6.20, both exceeding company guidance due to stronger NAND pricing and demand. 
  1. What drove SanDisk’s revenue growth during the quarter? 
    Growth was supported by rising NAND prices, strong enterprise SSD demand from AI infrastructure, and improved product mix across edge and consumer segments. 
  1. How did profitability change during fiscal Q2 2026? 
    Non-GAAP gross margin expanded to 51.1%, while operating margin increased to 37.5%, reflecting pricing strength and cost discipline. 
  1. What is the company’s outlook for fiscal Q3 2026? 
    SanDisk expects revenue between USD 4.4 billion and USD 4.8 billion and non-GAAP EPS between USD 12 and USD 14. 
  1. Why is AI demand important for the NAND industry? 
    Artificial intelligence workloads require significantly higher storage capacity, increasing demand for enterprise SSDs and advanced NAND technologies.