Shares of Western Digital’s Sandisk spinoff have surged as data-center demand for flash memory accelerates, driven by the storage needs of generative AI deployments. According to the company’s latest reported fiscal results, Sandisk’s revenue jumped sharply year over year, with the data center segment expanding far faster than the consumer business.
The rally has outpaced most investors’ expectations, but the stock’s valuation still appears anchored to cyclical memory assumptions, according to valuation metrics cited in the report. Investors are now focusing on whether Sandisk can extend high growth through the multi-year visibility provided by customer contracts.
Key takeaways
- Price move: Sandisk shares have risen dramatically over the past year, including a 500% gain in 2026 reported by the article, after pulling back from a June peak.
- Catalyst: Revenue growth has been led by a surge in the data center business, supported by multi-year New Business Model agreements with customers.
- Valuation implication: The article argues Sandisk trades at lower earnings multiples than Nvidia did during earlier phases of the AI build-out, implying the market may be underpricing the storage cycle.
- What investors should watch: Progress in shifting revenue mix toward data center storage and the durability of contracted demand.
What drove the move
Sandisk specializes in NAND flash storage and enterprise solid-state drives, selling products across three end markets: data centers, edge devices (including PCs, phones, cars and gaming consoles), and branded consumer storage. The company’s core growth story, as described in the article, is that AI workloads do not end at GPU compute; they also require high-speed storage for data lakes, model weights and inference-time caching as deployments scale.
For the fiscal year ended July 3, Sandisk generated $20.2 billion in revenue, up 175% year over year. The company posted GAAP earnings per share of $73.76, after a loss in the prior year.
While the revenue headline is strong, the article attributes the most significant change to the company’s mix shift toward data centers. Edge remained Sandisk’s largest business at $12.2 billion, up 195% year over year. Consumer revenue increased 29% to $2.9 billion, while Sandisk’s data center segment jumped 437% to $5.2 billion.
On a quarterly basis, the article says data center revenue nearly doubled sequentially to $2.9 billion and was up more than twelvefold versus the year-ago period.
Market reaction and why valuation has become the focus
According to the article, Sandisk shares have been among the standout performers tied to the broader AI supply chain. It reports that the stock rose roughly thirtyfold over the past year and that 2026 has already delivered gains of more than 500%, even after a pullback from the June peak.
Despite this strong momentum, the piece argues that investors have not fully repriced the stock based on the speed of data center growth. It cites earnings multiple benchmarks to support that view, stating that Sandisk’s price-to-earnings ratio is around 20 and its forward earnings multiple is roughly 7.
The article compares those figures with how Nvidia was valued on a forward basis during its own early AI infrastructure expansion, when Nvidia’s forward P/E moved from around 30 to levels above 50 as the market increasingly priced in the company’s capture of the first wave of AI build-out.
In the author’s view, Sandisk’s lower forward multiple—despite rapid data center compounding—suggests the market may still be treating memory demand as a cyclical pattern rather than a longer-duration spending cycle tied to AI. For investors, the implication is that any continued mix shift toward data center revenue could pressure the valuation higher over time, assuming earnings growth holds.
Bigger picture: contracts aimed at turning backlog into visibility
A key element in the article’s argument is the contract structure that could reduce demand uncertainty. The piece references a “floor” demand figure of $93.9 billion, described as not a forecast but a baseline level linked to Sandisk’s commitments.
According to management, Sandisk has signed New Business Model (NBM) agreements with eight data center and edge customers. These agreements, as described, are designed to lock in committed bit volumes and blend fixed and variable pricing with floors and ceilings.
The article states that NBM terms run as long as five years, with a weighted average term of more than four years. At the end of the fourth quarter, it says Sandisk reported $59.8 billion of remaining performance obligations (RPO), which rose to $91.1 billion after adjusting for two post-quarter agreements.
Contract visibility matters for memory suppliers because it can convert historically volatile pricing into a more predictable revenue stream. The article draws an analogy to how Nvidia’s early chip architecture announcements drew rapid hyperscaler commitments, while Sandisk’s agreements provide multi-year demand visibility without requiring product codename narratives.
What to watch next
With Sandisk’s growth tied to how quickly AI infrastructure builds out beyond chips, investors will likely track whether data center revenue continues to expand at a similar pace, and whether contracted demand translates into sustained earnings power. Future quarterly updates will be especially important for confirming the durability of the data center mix and any changes in guidance as hyperscalers balance capex cycles against storage requirements. Upcoming earnings and major macro data, particularly those that influence interest-rate expectations, will also be closely watched for their impact on long-duration growth valuations.
