Memory storage company SanDisk delivered exceptional financial results Thursday, driven by surging demand for its products in the rapidly expanding artificial intelligence market.
The tech firm announced revenue that more than tripled to $5.95 billion for its third quarter ending April 3, far exceeding analyst projections of $4.70 billion. Adjusted earnings reached $23.41 per share, crushing expectations of $14.50 per share and marking a dramatic turnaround from a 30-cent loss during the same period last year.
SanDisk has emerged as a major winner in the AI revolution, as its NAND storage memory chips have become essential components for AI systems processing vast amounts of legal documents and software code. However, memory chip prices have historically experienced volatile swings based on market demand cycles.
To address this challenge, CEO David Goeckeler revealed the company has established five long-term supply deals with customers spanning one to five years. Three agreements finalized during the recent quarter total $42 billion in value, with two additional contracts signed in the current period.
“The bane of this industry has been the boom-bust cycle,” Goeckeler explained in a Reuters interview. “We want to get out of that. We want consistent, predictable economics.”
The executive acknowledged investor concerns about long-term memory industry contracts, noting previous attempts have failed when customers renegotiated during market downturns. SanDisk has structured these new agreements with protective measures including price limits, market-based adjustments, and binding financial commitments that prevent customers from abandoning contracts without payment.
“Consistency is very important to me,” Goeckeler stated. “We put a financial structure in place that says at the beginning of the contract, if you make a financial commitment to me as the customer, if you walk away from a contract, I get that money.”
Looking ahead, SanDisk projected current quarter sales between $7.75 billion and $8.25 billion, with adjusted earnings of $30 to $33 per share. Both forecasts significantly exceed analyst estimates of $6.49 billion in revenue and $22.70 per share in profits.
The company also announced a $6 billion stock repurchase program effective immediately with no expiration date. SanDisk shares have surged more than 360% this year, though they declined 6% in after-hours trading following the earnings announcement despite initial gains.
