AI Inference as the Biggest Engine! SanDisk's Three Major Goals: Mid-to-High Double-Digit Revenue Growth, 80% Gross Margin, and Full Cash Return to Shareholders

SanDisk unveiled its long-term financial model for fiscal years 2028 to 2030 on Thursday (13th), forecasting sustained mid-to-high double-digit revenue growth, a non-GAAP gross margin of approximately 80%, an operating margin of around 75%, and an adjusted free cash flow margin of about 50%. The company also committed to returning 100% of excess cash to shareholders after completing investments necessary to support business growth, causing its stock price to surge as much as 17.6% intraday.

Amid rising AI inference demand driving storage and memory needs, Sandisk Corporation (SNDK-US) held its 2026 Investor Day on Thursday, August 13 (Eastern Time), announcing its long-term financial model for fiscal years 2028 to 2030. This announcement significantly raised market expectations for the company’s future revenue, profitability, and cash flow performance. SanDisk expects revenue to maintain mid-to-high double-digit growth over these three fiscal years, with a non-GAAP gross margin of approximately 80%, an operating margin of around 75%, and an adjusted free cash flow margin of about 50%. The company also pledged to return 100% of excess cash to shareholders after completing investments required to support business growth.

This financial model signals a strategic shift for SanDisk—from a sole focus on increasing NAND bit shipments to prioritizing profitability, cash flow, and capital efficiency. The company anticipates revenue growth to align with bit shipment growth, while actively adjusting the volume of sellable bits to avoid oversupply caused by technological upgrades, thereby maintaining product pricing and profit margins.

SanDisk noted that from FY2028 to FY2030, operating expenses are expected to account for approximately 5% of revenue, with other income and expenses not expected to have a significant impact. After accounting for taxes, capital expenditures, and working capital required to support business growth, the company still projects an adjusted free cash flow margin of about 50%. For the highly cyclical NAND industry, this represents a notably aggressive long-term profitability target.

It should be noted that SanDisk’s fiscal year does not align with the calendar year. The fiscal year ends on the Friday closest to June 30, typically spanning 52 weeks. The 2026 fiscal year ended on July 3, 2026, so the referenced FY2028 to FY2030 does not simply refer to calendar years 2028 to 2030, but rather the company’s planning window for three consecutive future fiscal years.

The news was met with an immediate positive market reaction. SanDisk’s stock price surged as much as 17.6% intraday on Thursday, closing nearly 14% higher. Over the same period, SK Hynix’s stock rose over 7%, Western Digital Corp. (WDC-US) gained more than 7%, Seagate Technology Holdings plc (STX-US) climbed nearly 5%, and Micron Technology, Inc. (MU-US) rose over 4%, indicating investors viewed SanDisk’s financial outlook as a signal of improving demand and profitability across the memory industry.

Markets are particularly focused on SanDisk’s redefinition of 'bit growth.' The company stated that its long-term bit input growth target remains in the mid-to-high double digits, but the volume of sellable bits will be flexibly adjusted based on profitability optimization needs. In other words, SanDisk does not intend to treat maximizing shipment volume as its sole growth objective, but rather aims to control supply so that each bit generates higher economic value.

This strategy is especially important for the NAND industry. NAND process technology upgrades typically significantly increase the number of bits producible per wafer. If companies directly inject all capacity gains from technological advances into the market, it could lead to rapid supply growth, depressing prices and triggering another industry downturn.

According to KC Rajkumar, an analyst at Lynx Equity Strategies, SanDisk CEO David Goeckeler stated that the long-term bit input growth target is mid-to-high double digits, but the actual sellable bit volume will be adjusted based on profitability optimization needs and could even exceed mid-to-high double-digit growth in certain periods. Rajkumar noted that each NAND technology node transition at SanDisk typically brings about a 54% bit growth, meaning the company can control market supply by moderately reducing wafer output during technology transitions, preventing all new bits from turning into oversupply.

This logic is one of the key foundations for SanDisk’s ability to set an 80% long-term gross margin target. The company aims to convert part of the bit density gains from technological upgrades into higher profitability, rather than allowing all new capacity to flood the market.

In addition to improving profitability, SanDisk is also significantly strengthening long-term partnerships with customers. The company has already signed New Business Model (NBM) agreements with eight customers. These agreements include volume purchase commitments, binding contract frameworks, minimum financial guarantees, and structured pricing mechanisms, helping align customer demand with the company’s capacity planning and reducing the traditional cyclical risks in the NAND industry.

These eight NBM agreements currently cover about 50% of bit shipments for FY2027 and are expected to cover about two-thirds of bit shipments by FY2028. According to MarketWatch, these agreements have an average contract duration of over four years and include minimum price protections, enhancing visibility into SanDisk’s future revenue and cash flow.

SanDisk CFO Luis Visoso stated that the company’s confidence in this long-term financial model stems from the multi-year NBM agreements with customers. The company also aims to return 100% of excess cash to shareholders after investing in business growth. This implies that if the company achieves an adjusted free cash flow margin of about 50%, shareholder returns could become a major component of future capital allocation.

AI is one of the most critical long-term demand drivers behind this financial outlook. As AI applications expand from model training to inference, token usage continues to grow, and KV Cache is reshaping the memory hierarchy in data centers. SanDisk believes AI inference will make data centers increasingly reliant on storage, driving rapid expansion in the enterprise flash market.

The company estimates that by 2030, the total available market (TAM) for enterprise data center flash will reach 1.2ZB. This forecast suggests that AI inference will not only increase demand for GPUs and HBM but could also transform data center storage architecture, creating new long-term demand for NAND and enterprise SSDs.

On the product technology front, SanDisk is advancing a two-dimensional expansion strategy based on CMOS Bonded Array (CBA), aiming to more flexibly develop customized products for different markets while improving capital efficiency. The company’s BiCS9 QLC technology is the first example of this strategy, combining a BiCS8 array with a BiCS10-based CMOS wafer.

Additionally, the next-generation BiCS10 QLC node achieves a 60% increase in bit density compared to BiCS8, allowing the company to increase storage density while avoiding rapid supply expansion by controlling wafer output.

SanDisk is also actively investing in High Bandwidth Flash (HBF) technology, positioning it as a new memory solution for the AI inference era. HBF aims to fill part of the gap between DRAM and traditional NAND, offering higher performance, lower power consumption, and higher storage density to meet the rapidly growing demands of AI inference workloads. MarketWatch reported that SanDisk has secured support for HBF technology from partners such as Google and Meta, with sample shipments expected to begin next year.

From an industry perspective, SanDisk’s financial outlook further highlights the current tight supply-demand conditions in the memory market. Driven by AI data center expansion, NAND demand and pricing continue to improve, giving memory manufacturers stronger pricing power. SanDisk’s latest quarterly gross margin has surged from 26.4% a year earlier to 84.6%, illustrating the amplifying effect of the current supply-demand environment on profitability.

However, SanDisk’s financial targets for FY2028 to FY2030 remain forward-looking projections and are not guaranteed outcomes. The company’s future profitability may still be affected by factors such as NAND average selling prices, AI demand, competitive landscape, technology transitions, supply chain, capital expenditures, and industry cycles.

For investors, the biggest takeaway from this Investor Day is not simply that SanDisk is optimistic about NAND demand, but that the company is attempting to transform the traditional memory industry business model of 'pursuing volume and enduring price cycles.' By controlling supply, signing long-term contracts, increasing the share of enterprise products, and betting on AI inference storage demand, SanDisk aims to convert technological progress and AI demand into higher, more stable profits and cash flows.

If this strategy ultimately succeeds, SanDisk will not only benefit from increased AI data center storage demand but could also become a representative company of the NAND industry’s shift from 'volume growth' to 'profit growth.' The market will closely watch whether the company can maintain mid-to-high double-digit revenue growth while sustaining approximately 80% gross margins, 75% operating margins, and 50% free cash flow margins over the long term.