Sandisk Surpasses Q2 FY 2026 Revenue Expectations on AI Storage Demand
Sandisk delivered strong Q2 FY 2026 results, driven by accelerating demand for AI-focused storage. Overall, revenue reached $3.0B, rising 61% year on year and surpassing expectations. Meanwhile, non-GAAP gross margin expanded to 51.1%, reflecting a richer mix and tighter supply discipline. As a result, non-GAAP operating income climbed to $1.1B, while non-GAAP net income reached $1.0B.
By segment, data center revenue rose to $440M, up 76% year on year. At the same time, edge revenue increased 63% to $1.7B, and consumer revenue grew 52% to $907M. Consequently, operating margin improved to 37.5%, underscoring stronger execution across the portfolio.
AI Data Center Momentum and Supply Strategy
Data center storage emerged as a key growth engine, as revenue grew 64% sequentially. In particular, hyperscalers and system builders expanded adoption of high-performance SSDs to support AI training and inference. Moreover, PCIe Gen5 TLC drives achieved qualification at a second hyperscaler, with additional qualifications expected ahead.
At the same time, management emphasized a shift toward multi-year commercial agreements. These frameworks provide firmer supply and pricing visibility, while also reducing historical NAND cyclicality. Bit supply growth remains in the mid-to-high teens through the BiCS8 transition, and capital plans stay unchanged unless long-term commitments justify expansion. Additionally, the extension of the Yokkaichi joint venture with Kioxia through 2034 supports scale, cost efficiency, and roadmap continuity.
Looking ahead, data centers are expected to become the largest NAND market in 2026. Furthermore, early estimates for key-value cache workloads point to significant incremental exabyte demand beyond current forecasts. Together, these factors increase leverage to AI-driven storage spending.
Edge, Consumer Mix, and Outlook
Edge demand continued to exceed supply, largely because AI adoption in PCs and mobile devices drove higher storage content per system. Similarly, the consumer business benefited from a shift toward premium configurations and targeted product innovation. New offerings, combined with licensing and marketing initiatives, supported stronger margins and sustained volume growth.
For Q3 FY 2026, revenue is guided to $4.4B–$4.8B, while non-GAAP gross margin is expected between 65.0% and 67.0%. In addition, non-GAAP diluted EPS is projected at $12.00–$14.00 on roughly 157 million shares. Management expects tighter market conditions than in Q2, even as seasonality moderates. Overall, the combination of AI-driven demand, disciplined supply, and multi-year commercial alignment positions the company for durable margins and more predictable growth through the second half of FY 2026.
