Sandisk Q3 Revenue Jumps 251% YoY on AI Data-Center Surge; Q4 Guidance Raised

Transcript intelligence

What changed

Compared to Q2 FY2026, where revenue was $3.0 billion (up 31% sequentially) and non-GAAP EPS was $6.20, Q3 represents a step-function improvement. Revenue nearly doubled sequentially, EPS roughly quadrupled, and data-center growth accelerated from a 64% sequential gain to 233%. The prior quarter's guidance of $4.4-$4.8 billion revenue and $12-$14 EPS was exceeded by a wide margin ($5.95B actual revenue, $23.41 actual EPS). New developments this quarter include the five NBM agreements with $11 billion in financial guarantees, the $6 billion share buyback authorization, and confirmation that QLC Stargate SSDs will ship in Q4. The Kioxia JV extension previously announced in Q2 was complemented by a new Nanya investment for DRAM supply diversification. Capex outlook shifted from increasing in Q2 to stable in Q3.

Guidance delta

Q2 management guided Q3 to $4.4-$4.8 billion in revenue and $12-$14 in non-GAAP EPS. Actual Q3 results came in at $5.95 billion and $23.41, beating the midpoint of revenue guidance by approximately 24% and EPS guidance by roughly 79%. For Q4, management raised guidance to $7.75-$8.25 billion in revenue (implying 30-38% sequential growth) and $30-$33 in non-GAAP EPS, a further step-up from already elevated Q3 levels. Capex outlook shifted from increasing to stable.

Key takeaways

• Q3 revenue of $5.95 billion grew 251% YoY, with data-center revenue up 233% sequentially, driven by AI inference, KV cache, and RAG workloads.
• Non-GAAP EPS of $23.41 beat the $14.62 consensus by 60%; gross margin reached 78.4% and operating margin 70.9% on a higher-value customer mix.
• Five multiyear NBM agreements signed, backed by $11 billion in financial guarantees, covering over a third of FY27 bit volume and reducing cyclicality.
• Q4 guidance raised to $7.75-$8.25 billion revenue and $30-$33 non-GAAP EPS, implying continued sequential acceleration.
• $6 billion share buyback authorized; cash balance stands at $3.735 billion.
• QLC Stargate SSDs slated to ship in Q4, expanding the product portfolio into higher-density workloads.

Management priorities

• Ship QLC Stargate SSDs in Q4 to address higher-density workloads.
• Continue signing NBMs to increase contracted bit volume beyond a third of FY27.
• Invest in BiCS 8 roadmap and nodal transitions to sustain mid-to-high-teens bit growth.
• Extend JV with Kioxia through 2034 and expand DRAM supply via Nanya investment.
• Deploy share buybacks as cash flow permits under the $6 billion authorization.