Sandisk Corporation (SNDK) Q2 FY26 Earnings Analysis Report
MASSIVE beat and Guidance upgrade: Q3 revenue guide 58% and EPS 200% above consensus. Revenue in Q3 growing at 170% YoY and 52% QoQ.
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Executive Summary: Sandisk Corporation ($SNDK) - Fiscal Q2 2026 Analysis
One of the standout results of the earnings season.
Result: Massive Beat on both revenue (+12.5% vs. consensus) and adjusted EPS (+75.1% vs. consensus).
Revenue: $3.03 billion, exceeding the high end of management’s own prior guidance.
Non-GAAP Gross Margin: 51.1%, an expansion of 21.2 percentage points sequentially.
Adjusted Free Cash Flow: $843 million, up 88% QoQ, driven by strong operational execution and a “structural reset” in supply/demand dynamics.
Growth Momentum: Accelerating. Revenue growth jumped from 23% YoY in Q1 to 61% YoY in Q2 and is forecast to grow by 170% YoY in Q3, fueled by an explosion in Datacenter/AI demand.
MD&A Tone: Bullish and Strategic. Management shifted from “strong execution” (Q1) to “industry-leading performance” (Q2), emphasizing their unique position at the intersection of AI infrastructure growth.
Guidance: Substantially Above Consensus. Q3 revenue guidance midpoint ($4.6B) is 58% above consensus, implying massive upward analyst revisions.
Conclusion: Sandisk has entered a hyper-growth phase. The “Stargate” and BiCS8 product cycles are perfectly timed with a massive AI infrastructure build-out, allowing the company to operate in a high-margin “allocation environment” where demand far outstrips supply.
Performance Highlights and Quantitative Comparison
Performance Summary Table
Key Business Drivers
Datacenter Explosion: Revenue grew 64% QoQ to $440M, driven by AI infrastructure builders.
Pricing Power: Average Selling Price (ASP) per Gigabyte rose by mid-30% in Q2, a massive acceleration from the “mid-single digits” growth in Q1.
Edge Market Allocation: Demand significantly exceeded supply in the Edge market (PCs/Smartphones), forcing the company to prioritize high-margin products.
Inventory Management: Inventories decreased from $2.08B to $1.97B while revenue scaled, indicating high velocity and healthy demand.
Management Discussion & Analysis (MD&A) Comparison
Narrative Summaries
Management Discussion (Current Quarter): Management is highly optimistic, characterizing the current period as the “perfect moment” where their technology portfolio meets market dynamics. The focus is on a “structural reset” to align supply with sustained AI demand, leading to record profitability and industry-leading margins. CEO David Goeckeler emphasized Sandisk’s “agility” in shifting to premium product mixes during an allocation environment.
Management Discussion (Prior Quarter): In Q1, the tone was focused on “strong execution” and “tailwinds” from AI. Management celebrated achieving a net cash position six months early and the early benefits of the BiCS8 technology transition. The emphasis was on stabilizing the business post-separation from Western Digital.
Semantic Comparison & Tone Shift
Very large sentiment improvement evident.
Recurring Themes: AI infrastructure, BiCS8 technology, Datacenter growth, separation from WDC.
New Themes: “Allocation environment” (supply shortages), “Stargate” qualification progress, “Structural reset” of the industry.
Tone Shift: The tone has shifted from cautious optimism regarding a recovery to aggressive confidence in a multi-year growth cycle. Q1 focused on “execution” in a “strengthening” market; Q2 claims “industry leadership” in a market where they cannot produce enough to meet demand.
Guidance Evaluation and Consensus Implications
Guidance Table
Guidance Growth Assessment
Next Quarter (Q3) Implied Growth: Guidance of $4.6B revenue represents 52% QoQ growth and over 170% YoY growth (vs Q3’25 revenue of $1,695M).
Full Year (FY26) Implications: Through H1 FY26, Sandisk has generated $5.33B in revenue. If Q3 hits the $4.6B midpoint and Q4 remains flat, FY26 revenue would be $14.5B+, well above the current $11.27B consensus.
Analyst Impact: Analysts will likely be forced to raise FY26 EPS estimates by 50% to 100% to account for the projected 66% gross margins in Q3 and the massive ASP increases.
What is Missing?
FY26 Full-Year Guidance: While Q3 guidance was provided, management has not provided a formal full-year FY26 outlook. Market expectations prior to earnings were looking for more clarity on the sustainability of the “allocation environment” through the end of the year.
Detailed Stargate Revenue Contribution: While management noted Stargate is “advancing through qualification,” there is no specific data on the current revenue contribution or expected volume for CY2026.
Capital Expenditure Detail: While JV Gross CapEx is discussed, the long-term roadmap for capacity expansion to address the current “allocation” shortage is missing. The market likely expects a significant increase in CapEx to capture lost demand, which wasn’t fully detailed.
Disclosure: The publisher of The Inferential Investor holds a position in Sandisk Corp.