09.03.2026 Consolidation Notice

SanDisk Inc’s (ticker: SNDK) Q3 earnings report – made on the 30th of April 2026 – showcased a company increasingly embedding itself within the AI space and with increasingly higher benefits as a result of thereof.

To deconstruct how this was accomplished, some background on the company’s history would be in order.

SanDisk: A Quick History

Originally founded in 1988 as “SunDisk” by Eli Harari, Sanjay Mehrotra, and Jack Yuan, SanDisk was instrumental in developing and commercializing the practical applications of base NAND flash memory technology developed by Toshiba a year earlier. This became an enduring relationship: both companies formed the memory industry’s first joint venture in 1999 to develop and manufacture next-generation NAND flash, launched the world’s first commercial NAND Multi-level Cell (MLC) 1Gb chip in 2001, co-invented the “SD Card” format and spearheaded the development of 3D NAND technology.

The company was acquired by Western Digital for $19 billion in 2016 and re-emerged as a standalone company after Western Digital spun it out on February 21, 2025. In 2018, Toshiba sold its memory business “Toshiba Memory Corporation”) to a consortium led by Bain Capital for roughly $18 billion. Officially renamed “Kioxa Corporation”, it is majority-owned by Bain Capital (51.1%) and other shareholders, while Toshiba retains a minority stake. In early 2025 – nearly in parallel with SanDisk’s re-emergence, Kioxia completed a massive initial public offering (IPO) on the Tokyo Stock Exchange.

SanDisk effectively continues its decades-long relationship with Toshiba’s memory business as represented by Kioxia. It procures substantially all of its flash-based memory wafers from its business ventures with Kioxia, that are collectively referred to as “Flash Ventures”, wherein it has a 49.9% ownership interest while Kioxia has a 50.1% ownership. All of their flash-based memory wafers are manufactured in facilities located in Japan using semiconductor manufacturing equipment owned or leased by Flash Ventures. Each Flash Ventures entity purchases wafers from Kioxia at cost and then resells those wafers to SanDisk and Kioxia at cost plus a markup.

It could be argued that these developments have much to do with an increasing pivot away from the retail consumer and towards the corporate client.

Trend Analysis

It bears noting that SanDisk’s full Fiscal Year (FY) results in the proxy report had no history of positive earnings per share (EPS), net income or operating income. All of this has seen a substantial shift in the ongoing FY 2026.

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Source: Company Information; Leverage Shares analysis

If current trends continue, revenue is poised to grow a whopping 70% relative to FY 2025. Meanwhile, operating income as of the first nine months (9M) of FY2026 stands at $5.3 billion versus a loss of $1.3 billion in FY 2025 and over a $2 billion loss in FY 2023. Diluted EPS has gone from a negative $14.78 to a positive $29.42 in 9M 2026.

This reversal wasn’t just a market recovery; it was the result of a complete transformation of their business model.

While 2023–2024 was about GPU-heavy AI training, this shifted from late 2025 to potentially make 2026 the year of AI Inference. Running AI models for inference are best served by having massive amounts of “warm data” stored on high-speed enterprise-grade solid state drives (SSDs). SanDisk’s specialized TLC products (for compute-intensive workloads) and next-generation BiCS8 QLC (Quad-Level Cell) “Stargate” drives (for storage-intensive workloads) are rapidly becoming the industry standard, allowing them to capture premium pricing.

Historically, SanDisk had been a victim of the volatile “spot market” for memory chips. After spinning off, they are increasingly adopting a new business model: instead of selling chips at whatever price the market dictated that day, the company is busy signing multi-year contracts with hyperscalers (such as Meta and Microsoft) backed by firm financial commitments.

The success of this model is telling. In February 2025, SanDisk had entered into loan facilities collectively amounting to $3.5 billion in order in order to pay $1.5 billion to Western Digital for assets, liabilities, and certain legal entities. In March 2026, the outstanding balance on these loan facilities were repaid in full.

The company operates via three segments:

“Datacenter” (once known as “Cloud”) represents products for public or private cloud environments and enterprise customers.
“Edge” (once known as “Client”) provides corporate customers solutions ranging from PCs, automotive, and entertainment systems to industrial spaces.
“Consumer” represents its retail and other end-user products.

The “Edge” segment represented its largest market by some margin for years. This is beginning to change in SanDisk’s new avatar:

Source: Company Information; Leverage Shares analysis

While “Edge” has largely held steady in market, “Datacenter” is shifting at the expense of the “Consumer” segment. “Datacenter” sales have risen 126% in 9M 2026 relative to FY 2026; “Edge” and “Consumer” sales rose 63% and 5% respectively in the same period. Revenue distribution by region also reflects this change, with the production hubs of the East accounting for progressively higher dominance relative to the share of consumer regions such as the Americas and EMEA.

Furthermore, the company seems to be retooling rapidly, with trends indicating that FY 2026 might close with a 16% growth in R&D expenses and 57% growth in total operating expenses, which will likely contain goodwill impairment from the spinoff. As of the 3rd of April 2026, goodwill stood at a little shy of $5 billion.

A Repeat of Nvidia, Circa 2022?

SanDisk’s near quadrupling of datacenter revenue within two years draws some parallels to Nvidia in 2022, wherein began a transformation that took it from being a gamer/cryptominer darling to a corporate compute heavyweight. SanDisk’s product offering gains increasing traction at a time when memory manufacturers Samsung and SK Hynix are essentially tapped out for the entirety of 2025 under long-term commitments.

The pivot away from the retail consumer had been massively profitable for Nvidia; market sentiment indicates that the same story is likely being scripted for SanDisk. The stock is massively overbought and liable to see substantial swings in price over the next few quarters. However, as an investment thesis into the latest leg of the “AI Hype”, it might continue gaining favour from investors regardless of its overbought rating and despite the resulting volatility.

Professional investors in Europe might consider the +3x Long SanDisk ETP (SND3) during bullish trends in SanDisk’s price.

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