Asian memory chip stocks rose on Friday as SanDisk's (SNDK.US) optimistic performance outlook during its 2026 Investor Day boosted confidence that the artificial intelligence (AI) boom will bring long-term benefits to the industry. The Bloomberg Asia Semiconductor Stock Index rose as much as 1.6%, on track for its fifth consecutive day of gains; the index is now up more than 19% from its July low, recovering from last month's sharp sell-off. Among individual stocks, South Korean memory chip giant SK Hynix rose nearly 3%; Japan's chip giant Kioxia, a partner of SanDisk, jumped nearly 9% at one point, and was up over 4% at the time of writing.
On Thursday, SanDisk presented a long-term financial model at its 2026 Investor Day, outlining a series of financial targets for the period from fiscal year 2028 to fiscal year 2030, including maintaining mid-to-high double-digit revenue growth during that period. SanDisk also clarified market doubts about bit growth, stating that the amount of bits available for sale will be adjusted based on profit optimization needs, while committing to return 100% of remaining free cash flow to shareholders after completing business investments.
Following the announcement, the market quickly voted with its feet, sending U.S. memory chip stocks higher across the board. SanDisk closed up over 13%, Western Digital (WDC.US) and SK Hynix (SKHY.US) rose more than 7%, Seagate Technology (STX.US) gained nearly 5%, and Micron Technology (MU.US) was up over 4%.
The long-term financial model presented by SanDisk was undoubtedly the most closely watched aspect of the Investor Day. The company expects revenue to maintain mid-to-high double-digit growth from fiscal year 2028 to fiscal year 2030, with growth rates matching bit shipment growth; meanwhile, on a non-GAAP basis, gross margin is expected to remain around 80%, with an operating margin of approximately 75%.
Under this financial model, SanDisk expects operating expenses to account for about 5% of revenue, with no significant impact from other income and expenses. Even after accounting for taxes, capital expenditures, and the working capital required to support business growth, the company still expects an adjusted free cash flow margin of approximately 50%.
For the historically highly cyclical NAND memory industry, this set of targets is particularly aggressive. SanDisk is essentially sending a clear message to the market: AI-driven demand growth for storage is expected to keep the company's revenue growth and profitability at levels far above the traditional memory cycle average for years to come.
A key reason for SanDisk's strong confidence in this long-term financial model is the company's shift in its traditional NAND business model. The company disclosed that it has already signed New Business Model (NBM) agreements with eight customers. These agreements include committed purchase volumes, binding contract frameworks, minimum financial guarantees, and structured pricing mechanisms, which can improve the alignment between customer demand and the company's capacity planning and reduce the impact of the cyclical volatility typical of the traditional memory industry.
More importantly, the scale covered by these agreements is already significant: the currently signed NBM agreements cover approximately 50% of projected bit shipments for FY2027 and about two-thirds for FY2028. SanDisk believes this model can lead to more predictable revenue, higher visibility into cash flow, and more sustainable earnings growth.
Memory chip stocks, including SanDisk, have been among the biggest beneficiaries of the expanding AI trade this year. However, these stocks remain highly volatile, as investors remember previous industry cycles—sharp price increases have often been followed by steep declines.
Andrew Jackson, Japan Equity Strategist at Ortus Advisors, wrote in a report: "Even a few years ago, it would have been unthinkable for a NAND memory chip maker to provide such precise long-term forecasts. Compared to the more volatile spot pricing for memory chips, long-term agreements may help smooth out the traditional boom-bust cycles."
