Key Highlights

  • SanDisk said it expects non-GAAP gross margins to sustain at approximately 80% and operating margins at approximately 75% from fiscal 2028 through fiscal 2030.
  • The company plans to return 100% of excess cash to shareholders during that period after reinvesting in the business.
  • Micron's free Cash Flow reached about $17.5 billion in its third quarter and is expected to reach roughly $50 billion for fiscal 2026.
  • Long-term Supply agreements are intended to structurally reset margins higher and reduce the cyclicality typically associated with memory chip pricing.

Investor Day Signals Structural Shift in Memory Pricing Model

SanDisk Corp. (NASDAQ:SNDK) told investors this week that it expects non-GAAP gross margins to sustain at approximately 80%, with operating margins near 75%, from fiscal 2028 through fiscal 2030, under a new financial model built around long-term supply agreements. The company, which focuses on NAND flash storage-memory products, is taking an approach similar to that of memory rival Micron Technology Inc. (NASDAQ:MU), which specializes in DRAM including high-bandwidth memory but also maintains a significant NAND business. Both companies are seeking to lock in Demand and pricing through long-term agreements that provide greater visibility into future volumes, with the stated goal of resetting margins structurally higher and reducing the boom-bust cyclicality that has traditionally characterized the memory chip industry.

Sustained Margins Could Support Higher Valuation Multiples

If SanDisk's new financial model proves durable, it would suggest the company is less exposed to the typical Commodity cycle swings that have historically affected memory chip makers. Analysts note that while long-term frameworks are only estimates and actual results may vary, the broader adoption of these structural pricing agreements across the memory sector could support higher price-to-earnings multiples for companies like Micron that pursue similar strategies. SanDisk shares led gains in the memory sector following the presentation.

Capital Return Plans Could Signal Similar Moves From Rivals

SanDisk said it plans to return 100% of its excess cash to shareholders during the fiscal 2028 through 2030 period after funding necessary Business investment. Micron's free cash flow reached approximately $17.5 billion in its third quarter and is projected to reach about $50 billion for fiscal 2026, with one quarter remaining in the fiscal year. Should Micron adopt a similar Capital return approach beginning next year, it could theoretically repurchase roughly 10% of its market Capitalization in fiscal 2027 based on estimated free cash flow of $124 billion for that year.