Sandisk now commands an enterprise value of $240bn - forty times higher than exactly one year ago, when that same enterprise value was hovering around $6bn.
AI has played its part, as has a surge in investment for new data center construction and the race for computing power, which is propelling the valuations of all equipment manufacturers perceived as the big winners of this technological revolution into the stratosphere.
One might argue - recalling the advent of television, personal computing, or mobile phones - that history generally proves the opposite: that equipment manufacturers, after the initial windfall, suffer more than other segments from waning demand and competition.
What lies behind Sandisk's $240bn valuation? Looking in the rearview mirror: $7.3bn in revenue over the last fiscal year, an operating profit of $507m, stock options equivalent to a third of that amount, and negative free cash flow.
Looking at the road ahead, it is true that the memory manufacturer has shifted from a leisurely drive on a country road to a full-throttle acceleration on the highway. Revenue is expected to fluctuate around $19bn in FY 2026 - soon to be completed for Sandisk - with an operating margin exceeding 50%.
According to analysts' forecasts, 2027 will be equally high-voltage, with revenue expected to more than double again. This is because memory demand is exploding and existing capacity cannot keep up, resulting in a bottleneck and a price surge.
As a strategic buyer par excellence, Apple, for instance, anticipates a further 50% increase in memory prices in 2026. This will cost the Cupertino group less than 1% in gross margin; however, it is more acutely felt on a smaller scale, with DDR4 and DDR5 costs having increased between seven and twenty times in twelve months.
In this respect, there is nothing shocking about Sandisk's valuation if analyst forecasts materialize and the bottleneck continues to tighten. Conversely, if the opposite occurs...
For such profits are rarely sustainable for equipment manufacturers. Samsung Semiconductor posted operating margins near or above 50% during the DRAM cycle peaks in 2017-2018, although this window was brief, and the reversal was brutal; the Korean firm swung from these juicy margins to operating losses within eighteen months.
The Dutch group ASML and Taiwan's TSMC, both of which have quasi-monopolistic positions in their respective fields, operate with margins between 35% and 50% - which is already exceptional for an equipment manufacturer. Nvidia exceeds 60%, although the group led by Jensen Huang is more of a designer than an equipment manufacturer strictu sensu.
