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Sandisk gross margins hit 85% as AI demand lifts pricing power
The margin expansion is tied to multi-year, fixed-price contracts that provide tens of billions of dollars in minimum contracted revenue.
Sandisk’s profitability has shifted sharply, with its recently posted margin figures landing at 85% gross margins, a level described as unusually high for the memory hardware industry. The article points to revenue growth of more than 370% in the company’s earnings report earlier this month as a key driver behind the jump.
The outlet attributes the outsized margins to how Sandisk sells its flash memory. Instead of depending on volatile spot-market pricing, Sandisk has signed multi-year, largely fixed-price contracts with major customers, and the agreements are said to leave the company with tens of billions of dollars in minimum contracted revenue stretching years ahead.
That contract structure is framed as helping make Sandisk’s revenue more predictable, resembling an annuity-like subscription behavior rather than a one-time hardware sale. The article also links the pricing power behind these deals to storage demand connected to the AI boom, saying memory demand continues to outstrip supply and is expected to persist.
MarketBeat Ratings adds that analyst activity has followed the change in margins, noting Argus upgraded Sandisk to a Buy and set a $1,600 price target after recent profit-taking.
Additionally, the article says Sandisk’s stock is up 540% for the year, compared with 180% for Western Digital and 230% for Seagate, highlighting the degree to which Sandisk’s margin profile stands out among peers.