Sandisk shares jumped more than 14 percent in after-hours trading Thursday after the memory chip maker delivered earnings that left Wall Street estimates in the dust. The company reported adjusted earnings of $6.20 per share on $3.03 billion in revenue for the quarter that ended January 2, far surpassing the $3.62 per share and $2.69 billion in sales that analysts had forecast.
But the real shock came from what the company said it expects to earn next quarter. Sandisk told investors it would generate between $12 and $14 in adjusted earnings per share on revenue between $4.4 billion and $4.8 billion. At the midpoint, that profit guidance is more than 150 percent higher than the $5.11 per share analysts expected. The revenue guidance was almost 60 percent above what Wall Street had anticipated.
The numbers underscore how dramatically the storage industry has shifted in recent months, driven by an insatiable demand for the chips that power artificial intelligence systems.
Background
Sandisk separated from its parent company Western Digital in February 2025, and the move has proven spectacularly successful for investors. The stock has climbed nearly 1,400 percent since that split, making it one of the year's best performers. The separation allowed Sandisk to operate independently and respond more quickly to the booming demand for memory chips used in AI data centers.
The broader storage industry has benefited from a structural shift in how companies build and operate AI systems. Tech giants and startups alike are pouring billions into data center infrastructure to train and run artificial intelligence models. These systems require enormous amounts of fast, reliable storage, and companies are willing to pay premium prices to get the chips they need.
Sandisk's parent company Western Digital also reported strong results Thursday, though not quite as dramatic as its former subsidiary. Western Digital earned $2.13 per share on $3.017 billion in revenue, beating expectations and signaling that the entire storage industry is riding a wave of AI-driven demand.
Key Details
The company's fiscal second-quarter results showed the magnitude of this shift. Adjusted earnings surged 404 percent year-over-year, while revenue climbed 61 percent. Those numbers reflect both higher prices for memory chips and stronger demand from customers desperate to secure supplies.
Data center revenue, the most important segment for understanding Sandisk's future, jumped 76 percent year-over-year to $440 million. That represented a 64 percent increase from the previous quarter alone, a pace of growth that suggests demand is accelerating rather than stabilizing.
Why Prices Are Rising So Sharply
The average price Sandisk received per gigabyte of storage rose in the mid-30 percent range during the quarter. This happened even though the company only shipped modestly more chips by volume, with bit shipments up in the low single digits. The price increases reflect what analysts describe as unprecedented shortages of NAND memory, the type of chip that stores data.
These shortages give Sandisk and other memory makers significant pricing power. Customers need the chips to build AI data centers, and they cannot easily find alternatives. The company has also shifted its product mix toward higher-value enterprise solid-state drives used in data centers, which command premium prices compared to consumer storage products.
"This quarter's performance shows our agility in capitalizing on better product mix, accelerating enterprise SSD deployments and strengthening market demand dynamics, all at a time when the critical role that our products play in powering AI and the world's technology is being recognized," said Chief Executive David Goeckeler.
Sandisk attributed the surge in data center revenue to strong adoption among AI infrastructure builders, customers who need custom storage solutions, and technology companies deploying artificial intelligence at scale. The company signed long-term agreements with major customers, providing visibility into future demand and allowing it to plan production more confidently.
Edge computing revenue, which represents storage used outside traditional data centers, also surged 63 percent year-over-year to $1.678 billion. Consumer revenue climbed 61 percent to $907 million. Across the board, demand outpaced supply.
What This Means
Sandisk's forecast suggests the company expects this momentum to continue through the current quarter and beyond. The guidance implies the company will roughly double its revenue compared to the same period a year ago, a trajectory that seems almost impossible until you consider how rapidly AI adoption is spreading.
Analysts have begun describing the memory chip shortage as unprecedented, with one analyst naming Sandisk as a top sector pick for the year specifically because of the pricing power these shortages create. As AI models grow larger and more sophisticated, the demand for storage will only increase. Companies need nearline storage, which holds data that is not being actively used but must be quickly accessible for AI systems to function effectively.
The stock's 1,400 percent surge since the separation reflects investor confidence that Sandisk can sustain these growth rates for years. However, such dramatic price increases also mean the stock is pricing in very optimistic assumptions about future demand. If the AI boom slows or if other memory makers manage to increase production and ease shortages, the stock could face significant pressure.
For now, Sandisk has delivered exactly what investors hoped for when the company split from Western Digital. The separation allowed management to focus entirely on capturing the AI boom rather than managing a diversified storage business. The results suggest that strategy is working.
