Written by: Rita
SanDisk revealed at the Communacopia conference that long-term agreements (NBMs) cover 50% and 67% of planned shipments for FY27 and FY28, respectively. Even under a pessimistic scenario with declining NAND prices, the floor prices in these agreements support a gross margin of approximately 80%. Goldman Sachs, in its meeting summary report issued on September 9, maintained a Buy rating with a 12-month target price of $2,200, implying a 26.6% upside from the current stock price of $1,738.
Goldman Sachs believes that SanDisk's core thesis is shifting from cyclical trading to structural upgrading. The NAND market is transitioning from short-term spot pricing to long-term agreements, with data center demand becoming the primary driver. Supply growth is constrained, while demand continues to expand, fueled by AI inference. SanDisk is well-positioned in this cycle with stronger profit visibility, thanks to its joint venture platform with Kioxia and its low capital intensity.
NBM locks in an 80% gross margin
SanDisk management provided a detailed explanation of the financial components of NBM at the conference. The floor price clause is central, ensuring that even in extreme scenarios where NAND prices plummet, the company's gross margin on the majority of its business remains around 80%. This protective mechanism transforms SanDisk's profit structure, shielding it from the extreme volatility of spot prices.
In terms of coverage, 50% of the planned shipment volume for FY27 is covered by NBM, increasing to 67% for FY28. Goldman Sachs believes this level of coverage signifies a significant improvement in SanDisk’s revenue visibility over the next two years. Management’s confidence in its long-term financial targets is grounded in the certainty provided by these agreements.
Supply is limited as China's production is consumed domestically.
SanDisk views the NAND supply side as tight. Management believes that NAND supply growth will remain subdued in the foreseeable future, while the growing adoption of AI inference is driving sustained demand growth. This supply-demand dynamic provides support for prices.
Regarding the capacity expansion of Chinese competitors, SanDisk believes that the additional supply is primarily absorbed by the local market, with limited impact on the global market. Goldman Sachs also noted in its report that YMTC’s roadmap iterations represent a potential risk, but currently assesses their impact as manageable.
HBF opens up long-term space
SanDisk management is optimistic about the long-term prospects of HBF and KV Cache. HBF is seen as a potential solution to the AI "memory wall," with its higher density capable of meeting the dual demands of AI computing for memory bandwidth and capacity. KV Cache is critical for AI inference, and management has previously described it as a key component of the AI data center memory TAM.
Goldman Sachs, citing management estimates, projects that by 2032, KV Cache will account for approximately 35% of the $1.2 ZB AI data center memory TAM. This suggests that SanDisk has substantial long-term growth potential in AI storage that far exceeds that of traditional NAND.
Low capital intensity supports bit growth
The joint venture agreement between SanDisk and Kioxia has been extended to 2034. Management emphasized that this arrangement, combining IP ownership and R&D investment, enables the joint venture to achieve efficient manufacturing capabilities, with bit growth outpacing capital expenditures disproportionately. SanDisk’s capital intensity is approximately 5%, significantly below the industry average.
Management also indicated that, through the BiCS platform, the company has visibility into its technology roadmap for the next several years, enabling further bit growth at similarly low capital intensity. Goldman Sachs believes this cost advantage is a key differentiator for SanDisk compared to its peers.
Buybacks drive capital returns
SanDisk reaffirms that share repurchases are the primary means of returning excess capital to shareholders. The company has executed approximately $4.5 billion in repurchases. Management remains open to introducing a dividend in the future, but repurchases remain the core tool at this stage.
Goldman Sachs’ target price of $2,200 is based on a 20x P/E multiple applied to normalized EPS of $110. With the current stock price at $1,738, this implies a 26.6% upside potential. Goldman Sachs believes that the earnings stability from NBM, a constrained industry supply landscape, and low capital intensity collectively support this valuation.
Downside risks include: failure to realize long-term structural changes in NAND pricing; YMTC continuing to iterate its technology roadmap; and SanDisk failing to gain market share in the eSSD market.
Disclaimer
This article is a compilation and interpretation by Chaoxiang Research of a third-party brokerage research report (Goldman Sachs, September 9, 2026), combined with publicly available market information. The ratings, price targets, earnings forecasts, and related judgments cited herein reflect the views of the brokerage’s analysts and represent the position of their respective institution only; they do not reflect the views of Chaoxiang Research nor constitute any investment advice.
The market carries risks; make decisions independently. This article should not be used as a basis for buying or selling any securities.