Sandisk is securing multiyear sales deals with customers to provide more revenue visibility.
Microsoft, Nvidia, and Alphabet have signed contracts locking up 70% of Samsung’s memory production through 2031.
That deal intensifies the memory shortage and shows substantial demand, which could set Sandisk up to make some lucrative deals with net profit margins approaching 80%.
Sandisk (NASDAQ: SNDK) stock has more than quintupled year to date, but despite those gains, its rally still doesn’t appear to be over. The long-term tailwinds in the memory market just accelerated, and Sandisk is one of the best-positioned companies in the industry.
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Investors have greatly underestimated the durability of the current memory chip boom, even the most bullish ones. Samsung (OTC: SSNLF) recently reported that three large customers had signed deals locking up 70% of its memory chip capacity through 2031: Nvidia (NASDAQ: NVDA), Microsoft (NASDAQ: MSFT), and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL).
Those deals are a big catalyst for the entire memory sector, and while Samsung is the immediate beneficiary, Sandisk may emerge as the bigger winner. That’s because Sandisk has been growing sales at a faster rate than Samsung, thanks to its NAND flash memory storage chips.
Samsung reported 130% year-over-year revenue growth in the second quarter, while Sandisk delivered 372% year-over-year revenue growth. Sandisk told investors in its 2026 Investor Day that it, too, is securing multiyear deals with its top customers. The Samsung news has further limited the volume of memory chips that will be available for future customers, which will make it easier for Sandisk to command higher prices and sign more attractive multiyear deals.
These developments continue to squash the narrative about the cyclicality of the memory chip industry. While boom-and-bust cycles have long been the norm, these multiyear deals offer clear revenue visibility and demand, and lock in price floors. AI-driven demand for memory is also unlikely to slow down as companies invest more heavily in physical AI platforms such as humanoid robots and self-driving vehicles.
It’s not every day that a growth stock can more than quintuple in eight months while having fundamentals that justify that move, but Sandisk’s fundamentals do. The company went from a net loss in its fiscal 2025 fourth quarter to $6.9 billion in net income during its fiscal 2026 fourth quarter. This resulted in a compelling 77% net profit margin for the recent period.
The strong financial growth explains why Sandisk only trades at a 20 P/E ratio despite its incredible run-up. The Samsung deals show that the memory chip shortage is nowhere close to its conclusion. Just as it seems like memory will become more available thanks to new chip foundries coming online, tech giants snatch even more of it up. By the time we’re getting close to 2031, memory-chip makers like Sandisk may have orders covered through the five years beyond it.
If the artificial intelligence market grows at a compound annual rate of 30.6% through 2033, as Grand View Research forecasts that it will, Sandisk will have a great opportunity to extend its existing partnerships and provide shareholders with clear revenue visibility and growth for multiple years.
These factors make Sandisk stock a compelling buy opportunity for long-term investors.
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Marc Guberti has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
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