Sandisk (SNDK +1.38%) looks worth buying after its recent pullback, even though the memory and storage industry can be cyclical. The stock is down 23% from its June 2026 high of $2,354, despite a fiscal fourth-quarter report that showed revenue surging 372% year over year.
The pullback may be setting up the next leg higher as data center storage demand accelerates.
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Data centers are now Sandisk's growth engine
For years, Sandisk was best known for consumer flash storage, such as microSD cards used in phones, cameras, and gaming devices. Today, it's become a major enterprise supplier. CEO David Goeckeler said at Goldman Sachs' Sept. 9 conference that the storage industry is at a "watershed moment," with data centers becoming more than half of the NAND flash market.
That shift has powered a 1,600% gain in the stock over the past year as of Sept. 24, 2026. AI workloads require massive memory and storage bandwidth, since model outputs must be stored and accessed quickly and repeatedly. The demand for these products is outstripping supply, sending Sandisk's revenue soaring.
Over the past year, the data center market grew from 12% of Sandisk's bit volume to 38% by the end of fiscal 2026 (ended July 3, 2026). Better yet, enterprise products typically carry higher margins than consumer ones. In the most recent quarter, adjusted earnings jumped 68% over the previous quarter to $39.25 per share, and analysts see earnings continuing to climb over the next two years.
NASDAQ: SNDK
Key Data Points
Long-term customer deals reduce (but don't erase) cycle risk
Historically, NAND pricing was negotiated quarterly, leading to sharp swings in average selling prices and volatile revenue. That structure is changing.
Sandisk has signed eight "new business model" agreements with data center and edge computing customers, securing nearly $94 billion in future revenue. These contracts run up to five years -- averaging more than four across the eight deals signed so far. Management expects them to represent more than 50% of bit volume in fiscal 2027, rising to about two-thirds in fiscal 2028.
The big benefit: these agreements help establish a pricing floor, supporting healthier margins. The drawback is that the remaining uncommitted volume is still exposed to price swings. If data center demand cools or Sandisk overinvests in manufacturing capacity, causing an oversupply situation, this could cause earnings to decline, sending the stock down.
So the cyclical risk isn't completely gone, but revenue and earnings should be more stable than in the past. Management expects revenue growth in the mid-to-high teens between fiscal 2028 and fiscal 2030. It also expects a roughly 50% free cash flow margin. This implies management is building toward a highly profitable, more sustainable long-term growth strategy that may not yet be priced into the stock.
With Sandisk stock trading at less than 10 times forward earnings -- and with a growing base of long-term customer commitments -- the dip offers a compelling value setup for investors willing to live with some remaining cycle risk.
