Data Centers Now Deliver a Third of Sandisk's Revenue -- $2.98 Billion in a Single Quarter
2026-09-02 22:38
•Daniel Sparks •The Motley Fool
•• •• Axe Cap view
Sandisk’s Data Center Pivot: Opportunity or Overpriced Bet?
Sandisk’s shift to data center storage has driven massive revenue growth amid sky-high margins but raises questions on sustainability.
Sandisk’s transformation since breaking away from Western Digital is remarkable. Jumping from $213 million to nearly $3 billion in quarterly data center revenue and locking in almost $94 billion in multiyear contracts signals serious confidence. Those pricing floors — minimum prices set in contracts — protect margins, which now sit near 85%. On paper, that’s a gold mine. Yet the stock is down 35% from its peak, reflecting investor skepticism over whether these contracts can weather a downturn in memory prices, which have a history of volatility. South African investors rarely get direct exposure to pure-play data center storage plays, but the USD/ZAR could react if global tech demand weakens, pressuring exporters and JSE tech counters like Naspers and Prosus. For those tracking the local currency, a surprise dip in demand leading to memory price cuts might add rand weakness. The story is promising but not yet proven through a full cycle; caution is warranted. this is just our opinion and not financial advice
Watch Sandisk carefully but don’t buy now — wait for signs the contracts hold firm during price dips. Keep USD/ZAR on your radar as a proxy for tech sector health impacting local markets.
- SNDK
- USD/ZAR
- Naspers
- Prosus
- Memory price collapse despite contracts
- Global tech demand slowdown affecting rand and JSE tech stocks
6/10
Sandisk has undergone a dramatic business transformation since separating from Western Digital in February 2025. Data center revenue now represents one-third of total quarterly revenue at $2.98 billion, up from just $213 million a year earlier. The company has signed 10 multiyear supply agreements (New Business Model) with eight customers representing a minimum of $93.9 billion in expected revenue with price floors and ceilings. Fiscal 2026 revenue surged 175% to $20.25 billion, driven primarily by higher pricing rather than volume growth, with gross margins reaching 84.6%. However, the stock has declined 35% from its 52-week high, suggesting the market has already priced in expectations of a significant memory pricing downturn.
Our take is based on reporting first published by The Motley Fool.