Key Points
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Sandisk’s board approved an additional $14 billion repurchase program on Aug. 5, bringing total remaining buyback authorization to $15.5 billion.
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The company generated $11.7 billion of operating cash flow in fiscal 2026, up from $84 million the year before.
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Management spent about $4.5 billion on repurchases in roughly two months under its April program.
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Memory maker Sandisk (NASDAQ: SNDK) reported fiscal fourth-quarter results last Wednesday, and the quarter itself wasn’t the biggest news in the release. The board approved an additional $14 billion share repurchase program, bringing Sandisk’s total remaining buyback authorization to $15.5 billion.
For perspective, the market values the entire company at about $181 billion as of this writing. Spent at recent prices, $15.5 billion would retire about 8.6% of Sandisk’s shares.
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Whether the program delivers that much value comes down to the cash flow funding it — cash flow that mostly didn’t exist a year ago.
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A sudden cash machine
Sandisk’s fiscal fourth-quarter revenue came in at $8.97 billion, up 372% year over year, while gross margin reached 84.6%, up from 26.2% a year earlier. Full-year revenue rose 175% to $20.2 billion in fiscal 2026 (ended July 3, 2026), and the company swung from a $1.6 billion net loss the year before to $11.4 billion of net income.
Pricing is doing most of the work. Sandisk said sequential revenue growth in the quarter came about one-third from higher volumes and two-thirds from higher pricing.
And datacenter revenue rose 437% year over year in fiscal 2026 as artificial intelligence (AI) infrastructure build-outs drove demand for the company’s NAND flash storage.
Booming prices fall almost straight through to cash. Operating cash flow reached $11.7 billion in fiscal 2026, compared to $84 million the year before, and it is still accelerating — the quarterly figure more than doubled from $3.0 billion in fiscal Q3 to $7.1 billion in fiscal Q4.
Meanwhile, capital spending totaled just $177 million for the year. Sandisk also paid off its long-term debt and finished the year with about $4.8 billion in cash. And even the company’s more conservative measure of cash generation is enormous: Adjusted free cash flow, which excludes about $2.5 billion of customer prepayments and deposits, was $8.7 billion.
Management has already shown its pace
The new authorization didn’t come out of nowhere. The board approved a $6 billion repurchase program on April 30, and by the time the fiscal year closed on July 3 (about two months later), Sandisk had already spent about $4.5 billion of it.
That pace explains the size of the follow-up. With only about $1.5 billion left on the April program, the board added $14 billion. The company said it expects repurchases to be funded by operating cash flows.
And CEO David Goeckeler said in the release that Sandisk’s technology and products “are well positioned to create value for our customers and generate growing and durable free cash flow.”
To me, that spending pace is the most telling number in the release.
At recent prices, the full $15.5 billion would repurchase about 13 million of Sandisk’s 149 million outstanding shares. Fewer shares means each remaining share holds a larger claim on the company’s earnings, though continuing stock-based pay will likely offset some of the reduction.
Will the pricing hold?
Of course, everything funding this program rides on memory prices. After all, a year ago this same business generated $1.9 billion of quarterly revenue at a 26.2% gross margin and essentially broke even. Pricing turned it into a company earning $11 billion a year. But memory pricing has historically swung in cycles.
For now, management expects conditions to keep improving. It guided fiscal first-quarter revenue to a range of $10.3 billion to $10.8 billion, another sequential step-up of 15% to 20%. Non-GAAP (adjusted) earnings per share are expected to land between $44 and $46, compared to $39.25 in fiscal Q4.
Sandisk is also signing customers to what it calls New Business Model agreements. After announcing five of them in April, the company signed five more, three with new customers. Upfront payments under these agreements totaled about $2.5 billion in fiscal 2026 (customers paying ahead for supply).
Investors, meanwhile, seem skeptical the earnings will hold. At about $1,212 as of this writing, shares trade near 16 times fiscal 2026 earnings and sit at about half their 52-week high.
A multiple that low, against growth that fast, is arguably the market betting that earnings come down. In other words, a rollover may already be priced in.
Ultimately, I think that skepticism applies to the buyback, too. If NAND pricing holds anywhere near current levels, Sandisk can fund the entire $15.5 billion with well under two years of cash flow. But if pricing rolls over the way it has in past cycles, the cash flow shrinks with it — and the company noted it can suspend the program at any time.
The business is generating extraordinary amounts of cash right now. How long that continues will decide what the $15.5 billion is worth.
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Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
