SanDisk reported a sequential 64% jump in data center revenue, driving that segment to $440 million in Q2 and underscoring its emergence as a core growth engine. The shift toward higher-margin enterprise storage solutions lifted the company’s gross margin to 51.1%, up sharply from 29.9% in the year-ago quarter. Management attributed the improvement to increased adoption of its high-end NVMe SSDs by hyperscale customers, which accounted for over 70% of total data center shipments during the quarter.

Looking ahead, SanDisk guided Q3 non-GAAP earnings per share to a range of $12.00–$14.00, effectively doubling the midpoint from Q2’s $6.20 and building on Q1’s $1.22 result. The company also forecast gross margins climbing further into the 65%–67% band, reflecting ongoing NAND flash price strength and continued operational leverage. Revenue guidance for the period implies sequential growth of approximately 40%, driven by robust order backlogs from leading cloud providers.

Since completing its spin-off from Western Digital in late 2025, SanDisk has carved out a pure-play position in NAND flash and solid-state drives, benefiting from a tightening supply environment. Industry data indicates global NAND wafer output declined by 5% year-over-year in Q2 even as AI infrastructure demand surged, a dynamic that has amplified pricing power across the flash market. SanDisk’s CEO highlighted long-term supply constraints and multi-year commercial agreements with top hyperscalers as key support for sustained margin expansion.

SanDisk’s shares have outperformed broader technology benchmarks, rising 242% between November 2025 and February 2026 and up 166% year-to-date. A consensus of Wall Street analysts has raised price targets by an average of 35% over the past three months, citing the company’s accelerating enterprise traction and structurally tight NAND supply. Institutional holders have increased their stakes, with several large asset managers boosting positions following the spin-off.