Western Digital Aims for AI Storage Boom, Targets 80% Gross Margin

Sandisk Corp. is betting that surging AI demand and a new contract-based sales model will make its highly cyclical NAND flash memory business more predictable.

At its 2026 Investor Day, Sandisk unveiled target models for fiscal 2028 through 2030, with mid-to-high single-digit revenue growth expected. It also forecasts non-GAAP gross margin of approximately 80%, non-GAAP operating margin near 75%, and adjusted free cash flow margin of about 50%.

Counterpoint Research analyst Neil Shah said the strategy could reshape Sandisk’s business, as AI shifts NAND demand toward higher-value enterprise storage.

Sandisk Locks In AI-Era NAND Demand

A key part of the strategy is Sandisk’s new business model. The company has signed agreements with eight customers covering roughly 50% of its NAND bits for fiscal 2027 and about two-thirds of its NAND bits for fiscal 2028.

The multi-year agreements include committed volumes, minimum financial guarantees, and structured pricing. Sandisk expects this framework to become its primary way of doing business.

This shift comes as AI drives a sharp increase in enterprise storage demand. According to Counterpoint, enterprise SSDs accounted for 48% of global NAND bit shipments in Q2 2026, nearly double the 26% share from a year earlier.

Sandisk estimates that by 2030, AI data centers alone could consume 1.2 zettabytes of NAND bits, as AI inference and KV cache workloads increase storage demand.

Competitive Risks Remain

However, Counterpoint has flagged a major challenge. Sandisk’s NAND revenue share has held between 12% and 13% over five straight quarters, while China’s YMTC has grown its share from 8% to 13%.

This means Sandisk’s growth thesis relies mainly on a larger NAND market, higher pricing, and a richer product mix — not major market share gains.

Counterpoint also cautions that Sandisk’s contracts have not yet been tested by a real NAND downturn. Still, the company expects tight supply conditions to continue for at least the next 18 months.

Meanwhile, Sandisk is developing technologies including high-bandwidth flash and 3D Matrix Memory. Counterpoint views HBF as a long-term opportunity, not a near-term revenue driver, and notes that Sandisk’s fiscal 2028–2030 model appears not to rely on it.

Stock Performance and Technical Analysis

Sandisk stock rose nearly 2% in Wednesday pre-market trading, after falling 9.01% on Tuesday. Nasdaq futures were down 0.03%, while S&P 500 futures were slightly up 0.01%.

The stock looks to be rebounding after the Tuesday selloff and remains clearly above its long-term trend indicator.

Sandisk trades 78.3% above its 200-day simple moving average (SMA) and 15.4% above its 100-day SMA. However, it sits about 1.2% below the 50-day SMA.

Momentum is improving — MACD is above its signal line with a positive histogram. Still, the 20-day SMA remains below the 50-day SMA, reflecting some near-term pressure.

Resistance is around $1,696.50, with support near $1,485.

Price Action

SNDK stock price activity: Sandisk shares were up 1.86% to $1,655.99 in Wednesday pre-market trading.