AI Demand Fuels SanDisk's Record Quarter, Signals Structural Shift for NAND Industry
By TechWire Staff
Thursday, January 29, 2026
SanDisk Corporation (NASDAQ: SNDK) reported blockbuster fiscal second-quarter results, underscoring how the artificial intelligence revolution is fundamentally reshaping the memory and storage landscape. The company posted revenue of $3.03 billion, a staggering 31% increase from the previous quarter and a 61% jump year-over-year, handily surpassing its own guidance.
Non-GAAP earnings per share soared to $6.20, up from $1.22 in Q1, driven by what executives termed a "step change" in demand, particularly from data centers building out AI infrastructure. The data center segment itself saw explosive growth, with revenue climbing 64% sequentially to $440 million.
"We are at the center of a broad expansion in AI infrastructure," said CEO David V. Goeckeler during the earnings call. "For the first time, the data center is expected to become the largest market for NAND in 2026. This isn't just a cyclical uptick; it's a structural evolution."
This evolution, according to SanDisk, is catalyzing a profound change in how business is done. The traditional, transactional model of quarterly price negotiations is giving way to discussions about multi-year supply agreements with firmer commitments. The driving force is the insatiable and predictable demand from hyperscalers and enterprises deploying AI at scale, who require supply certainty for their massive, long-term infrastructure plans.
"We're seeing customers across end markets and geographies reach out, seeking supply assurance," explained CFO Luis Visoso. "They see it as a critical enabler for their business." The company confirmed it has already signed one such long-term agreement, which included a prepayment component, with several more in discussion.
The demand surge has created an undersupplied market, allowing SanDisk to be strategic with its capacity allocation. The company is prioritizing "strategic customers" who align with its value-creation framework, leading to a significantly improved product mix and soaring margins. Non-GAAP gross margin reached 51.1%, up from 29.9% last quarter, and is forecast to hit 65-67% in Q3.
On the product front, momentum is strong. The company's high-performance PCIe Gen 5 TLC drives are gaining qualification at major hyperscalers, while its next-generation QLC product, codenamed "Stargate," is advancing through qualification and expected to ship for revenue in coming quarters. In the consumer segment, innovative products like the tiny SanDisk Extreme Fit USB-C drive and co-branded initiatives with names like FIFA are driving a 39% sequential revenue increase.
Looking ahead, SanDisk provided bullish guidance for Q3 2026, forecasting revenue between $4.4 and $4.8 billion and non-GAAP EPS between $12 and $14. Executives emphasized that their capital expenditure plans remain disciplined, focused on supporting mid-to-high teens bit growth, and are not chasing short-term demand signals.
"We need to get out of this idea that this is a transactional market where we only get a strong signal a quarter at a time," Goeckeler concluded, framing the current moment as the early stage of a durable transformation for the NAND industry.
Market Voices: Analyst & Investor Reactions
Eleanor Vance, Senior Technology Analyst at Clearwater Capital: "SanDisk's results are a clear bellwether for the entire semiconductor space. The magnitude of the margin expansion is breathtaking and speaks to a fundamental power shift. This isn't just about AI demand; it's about the industry successfully moving away from a commoditized, cut-throat pricing model. The push for LTAs could create a more stable and profitable industry for years to come."
Marcus Thorne, Portfolio Manager at Apex Growth Fund: "The guidance is frankly astonishing. A $12-$14 EPS range next quarter? That's a vertical move. It validates our thesis that memory is the bottleneck and primary beneficiary in the AI stack right now. The key question is sustainability, but with data center demand visibility improving and inventory discipline across the supply chain, this upcycle has legs."
Rebecca Choi, Founder of TechEthics Watch: "Let's not get swept away by the euphoria. These 'record' profits are built on extreme concentration and allocation. While SanDisk and its customers negotiate cozy multi-year deals, what happens to the smaller innovators and startups who can't commit to massive prepayments? This 'structural shift' looks a lot like the big players building a moat that locks others out, potentially stifling competition and inflating costs for the entire ecosystem downstream."
Dr. Aris Mendis, Engineering Professor & Consultant: "The technical details are as significant as the financials. The rapid qualification of Gen5 drives and the progress on QLC for storage-class memory highlight how innovation pace is accelerating to meet AI's unique needs—high bandwidth, massive capacity, and endurance. SanDisk's mention of 'high bandwidth flash' R&D is particularly telling; the architecture of AI compute is actively reshaping memory design at the silicon level."