Jim Cramer highlighted Sandisk Corporation (NASDAQ:SNDK) capital-return plans on the August 24 episode of Mad Money, as he said:
I do not envy the executives trying to appease shareholders with giant returns of capital. Most companies have a preset pattern. The average company in the S&P 500 returns a great deal of the profits to shareholders. Some companies take a pretty extreme approach. Apple returned roughly 94% of its profits, mostly in the form of buybacks, and it dramatically shrunk its share count. That worked fabulously for years as the buyback crunched on and on…
Sandisk has a similar playbook. At its August 13th investor day, the memory maker dazzled with the announcement that it intends to return 100% of its excess cash to shareholders. The company rewarded shareholders with $4.5 billion in buybacks in its fiscal fourth quarter alone. Also added $14 billion to its repurchase authorization. That’s one reason why the stock’s up 529% year to date. That’s the number one performer in the S&P 500… They kind of issued a put, a floor on the stock. Dell, the third-best performer, up 244%, wow, returned 126% of its net income to shareholders, 126%, mostly through buybacks. Net income was $5.9 billion. Buybacks were about $7.5 billion. I know that sounds reckless, but Dell’s operating cash flow is more than $11 billion. They can afford it.
Sandisk’s Earnings
Sandisk Corporation’s (NASDAQ:SNDK) fiscal 2026 results explain why investors have been willing to assign the company a dramatically higher valuation. Revenue reached $20.25 billion, up 175% from fiscal 2025, while GAAP net income reached $11.43 billion, compared with a $1.64 billion loss a year earlier. Q4 revenue alone reached $8.97 billion, up 51% sequentially and 372% year over year. The most striking change was profitability. The company’s fourth-quarter non-GAAP gross margin reached 84.6%, compared with 78.4% in the previous quarter and 26.4% in the year-ago quarter.
It is worth noting that the company said roughly two-thirds of its sequential fourth-quarter revenue increase came from pricing, while about one-third came from higher volume. If NAND prices remain elevated, Sandisk’s unusually high gross margins give it substantial operating leverage.
Sandisk Wants to Reduce Its Exposure to the NAND Cycle
Sandisk Corporation’s (NASDAQ:SNDK) fiscal 2028-2030 financial model targets seem ambitious for a NAND manufacturer because memory has historically been highly cyclical. Sandisk’s main answer is its New Business Model, or NBM, agreements. The company has signed agreements with eight customers covering approximately 50% of bits in fiscal 2027 and roughly two-thirds of bits in fiscal 2028. The agreements average about four years and are designed to provide greater visibility into pricing, volumes, and customer demand.
Bear Case is About Margin Durability
The strongest bear argument is not that AI demand will suddenly disappear; it is that investors may be valuing Sandisk Corporation’s (NASDAQ:SNDK) current earnings as though they represent a permanent earnings base. The company’s shift toward longer-term NBM agreements is intended to make earnings more predictable, but the model still has to prove that greater visibility can coexist with margins close to management’s long-term target. Competition is another risk. For Sandisk, the risk is that additional NAND capacity eventually grows faster than demand, putting pressure on pricing and margins.
Increased Hedge Fund Participation and Short Interest
Institutional positioning provides another piece of the picture. According to Insider Monkey’s hedge fund tracking, 128 hedge funds had stakes in the stock in Q2, up from 114 hedge funds at the end of Q1. Meanwhile, short interest sits at 7.36% of the float. Short sellers see risks in Sandisk Corporation (NASDAQ:SNDK) after its enormous rally, but the reported short position does not suggest an exceptionally crowded bearish trade. The stock’s performance remains primarily a fundamental story involving NAND pricing, AI-related storage demand, and the durability of earnings.
Sandisk Corporation’s (NASDAQ:SNDK) buyback plan gives shareholders another reason to remain bullish, but the stock’s long-term value will depend on whether the company can turn today’s exceptional NAND pricing into durable earnings power. If its NBM agreements help reduce cyclicality and margins remain near management’s long-term targets, the combination of strong cash generation and aggressive repurchases could support further per-share growth. If NAND prices normalize sharply, however, the buyback alone will not protect the valuation.
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