Goldman Sachs initiated coverage on SanDisk on Aug. 5 with a Buy rating and a $2,200 price target, saying the stock may face short-term pressure after third-quarter guidance came in below the market’s most bullish expectations, even though the broader long-term thesis remains unchanged.
In the report summarized by the source article, SanDisk posted second-quarter revenue of $8.97 billion, above Goldman’s $8.84 billion estimate and the market’s $8.71 billion expectation. Gross margin was 84.6%, also ahead of consensus, and non-GAAP earnings per share reached $39.25. For the third quarter, the company guided to revenue of $10.55 billion at the midpoint, below Goldman’s $11.65 billion forecast and the market’s $11.15 billion estimate. Midpoint EPS guidance of $45 was broadly in line with the market view but below Goldman’s $49.95 projection.
Goldman said investors had already priced in very strong assumptions on NAND pricing and AI-driven demand before earnings, so any signal that fell short of the most optimistic scenario was likely to be magnified. The report said the stock had already retreated 40% from its June high, meaning part of that expectations gap had already been absorbed.
Q2 beat was driven by enterprise SSD demand
SanDisk’s second-quarter revenue rose 50.7% quarter over quarter and 371.6% year over year. Goldman identified enterprise solid-state drive demand as the main driver behind the upside surprise. The report said AI training and inference workloads require fast, high-capacity storage for model parameters and intermediate data, while traditional hard drives cannot meet the latency requirements. That has supported stronger adoption of enterprise SSDs in AI infrastructure.
According to the article, SanDisk continued to gain share in that segment, and concentrated orders from major customers helped lift quarterly revenue. NAND pricing also stayed strong in the second quarter. The report added that the supply-demand gap in NAND did not narrow during the period, in part because HBM capacity consumed part of wafer-fab capacity and indirectly limited NAND supply flexibility.
Guidance miss became the market’s main focus
The midpoint of SanDisk’s third-quarter revenue guidance was 9.5% below Goldman’s estimate and 5.4% below the broader market expectation, according to the figures cited in the article. Gross margin guidance of 84% was 267 basis points below market expectations. Midpoint EPS guidance of $45 was lower than Goldman’s $49.95 estimate but roughly in line with the market’s $45.34 view.
Goldman said management would need to address several issues on the earnings call:
- details of newly signed long-term agreements,
- whether the company may pursue share repurchases,
- how durable the current pricing trend is,
- and the timeline for capacity expansion.
The bank’s read was that the negative reaction after earnings would reflect a reset in expectations rather than a change in the underlying business.
Long-term agreements are a key swing factor
Goldman said SanDisk signed new long-term agreements in the second quarter but had not disclosed details. The market is focused on the pricing terms in those agreements, the customer mix they cover, the share of capacity involved, and what they could mean for future average selling prices and gross margins.
The article said Goldman viewed these agreements through a lens similar to earlier examples in the DRAM industry. Their main function is to smooth cyclicality by exchanging longer-term volume and pricing commitments for supply stability. For SanDisk, that could cap upside in ASPs in the short run, since locked-in pricing with major customers may prevent the company from fully passing through spot-market price increases.
Over a longer period, though, Goldman said long-term agreements could materially improve revenue visibility and cash-flow predictability. That is one of the reasons the bank remains constructive on SanDisk’s medium- to long-term value. Its conclusion on LTAs was straightforward: they may restrain ASP flexibility in the near term, but they improve visibility on revenue and cash flow over time.
NAND is at a different stage from DRAM
The report contrasted the NAND market with DRAM. DRAM had already consolidated from 15 players to three, which improved supply discipline. NAND consolidation has moved more slowly, but Goldman said the rapid rise in AI data center storage demand is changing the industry backdrop.
SanDisk, as a pure-play NAND name, operates under a pricing environment and earnings cycle different from DRAM makers. Goldman said that difference also gives the company greater earnings leverage. The report described AI data center adoption of NAND as an emerging demand driver, while noting that the market still debates how durable that demand will be.
It also pointed to two medium- to long-term variables: whether SanDisk can keep expanding its share in enterprise SSDs, and whether YMTC’s technology iteration could threaten pricing power.
Valuation, upside, and downside risks
SanDisk currently trades at about 20.7x expected 2026 earnings and around 6.3x expected 2027 earnings, according to the report. Goldman’s $2,200 target is based on a 20x multiple applied to normalized earnings per share of $110.
The bank said that target implies roughly 54% upside. It also projected SanDisk’s free cash flow yield at 14.1% in 2027 and 16.5% in 2028, arguing that the company is positioned to convert pricing strength into sustained cash generation if structural changes in NAND continue.
Goldman also laid out downside risks. Valuation could come under pressure if the longer-term structural shift in NAND pricing does not hold, if YMTC continues advancing its technology roadmap, or if SanDisk’s market-share expansion in enterprise SSDs falls short of expectations.
Goldman keeps the long-term thesis intact
The core of Goldman’s view is that disappointment around third-quarter guidance came from elevated expectations rather than worsening fundamentals. In its framework, the long-term case still depends on whether structural changes in NAND persist and whether SanDisk can deliver on enterprise SSD share gains.
The article also said Goldman maintained a Neutral rating on Micron, adding that similar end-market exposure means SanDisk’s guidance shortfall could also transmit negatively to Micron.
The source article stated that it was a整理 and interpretation by 潮向研究 of a third-party brokerage report from Goldman Sachs dated Aug. 5, 2026, combined with publicly available market information. It also noted that the ratings, target price, earnings forecasts, and related judgments cited in the piece represent the brokerage analysts’ views only, do not represent 潮向研究’s position, and do not constitute investment advice. The article further said market decisions should be made independently and that the piece should not be used as a basis for trading any securities.