SanDisk Corp.‘s (NASDAQ:SNDK) second quarter earnings may have disappointed investors with softer-than-expected guidance, but BNP Paribas argues the bigger story lies beneath the surface.
In a note titled “A Glass Half Full,” the firm said one of the most overlooked developments was the growing financial commitment hyperscale customers are making to secure future AI storage capacity.
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Those commitments now extend beyond long-term supply agreements. According to BNP, SanDisk’s contracts are backed by $16.5 billion in financial guarantees, signaling that some of the world’s largest AI infrastructure builders are putting capital behind their demand forecasts rather than simply reserving future supply.
AI Customers Are Making Bigger Commitments
Following the quarter, SanDisk has signed five additional long-term agreements, bringing its total to 10 contracts with minimum expected revenue of $93.9 billion, according to BNP Paribas.
More notably, those agreements now include $16.5 billion in financial guarantees, a sign that customers are willing to make binding financial commitments years in advance to secure NAND supply.
The firm noted that the agreements are expected to account for roughly half of SanDisk’s shipment volume in fiscal 2027 and about two-thirds in fiscal 2028, giving the company significantly greater visibility into future demand than the NAND industry has historically enjoyed.
A More Predictable AI Business
For years, memory suppliers have operated in a market characterized by volatile pricing and rapidly changing demand. BNP argues SanDisk’s expanding portfolio of long-term agreements could help reduce some of that uncertainty by providing a larger base of contracted business.
The research firm estimates the agreements are expected to generate approximately 80% margins at floor pricing, offering downside protection even if market conditions weaken.
That growing visibility comes as AI inference and content generation continue to increase demand for enterprise solid-state drives, or SSDs, which BNP expects to remain a key driver of storage spending through 2026.
Why BNP Still Calls It ‘A Glass Half Full’ Story
Despite highlighting the strength of SanDisk’s long-term AI contracts, BNP maintained a Neutral rating and lowered its price target to $1,400 from $1,900, citing peer multiple compression.
The firm also pointed to several risks, including signs of softening consumer demand, increasing competition in China, rising inventory and concerns that gross margins may be nearing a peak.
Still, BNP concluded SanDisk’s improving long-term fundamentals offset some of those headwinds. While the near-term outlook remains mixed, the firm’s “glass half full” view suggests investors may be underappreciating how quickly AI customers are shifting from forecasting storage demand to financially committing to it.
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