By Nate Wolf

The flash memory market will remain "undersupplied for a long period of time," Sandisk CEO David Goeckeler told investors Wednesday, creating an opening for the memory maker to transform its business.

With memory becoming a crucial component in the artificial-intelligence boom, Sandisk is moving to multi-year agreements that give both the company and its buyers clearer picture of future orders and expenses. That model should help stabilize what was once a highly cyclical industry, Goeckeler argued at a J.P. Morgan conference.

Sandisk stock was up 0.8% to $1,394.51 on Wednesday.

Shares have surged almost 500% this year and are up roughly 3,500% over the last 12 months, raising the question of when the stock will peak. Past memory booms have resulted in oversupply and then deep downturns. That cyclicality was "really corrosive to our business," Goeckeler said.

Suppliers like Sandisk want to plan and operate fabrication plants at high capacity over a long time horizon. Customers, meanwhile, have typically wanted to buy only the chips they needed for a given quarter.

"You build a huge asset, you turn it on and the idea is you don't want to turn it off. It's very expensive to turn it off," Goeckeler explained. "That's not necessarily our customers' business model. They don't really think about, 'hey, how do I consume on a very predictable basis?' "

AI is changing that. Large customers want a dependable supply years in advance, and price is a secondary concern given supply constraints. Sandisk has signed five long-term new-business-model agreements as of the past quarter and is in active talks with other clients. It sees the supply-demand imbalance continuing at least through the end of 2027.

"Most cases, our customers are approaching us and the single first thing they say is, 'how can you ensure there will be supply?' It's not a price, " said Luis Felipe Visoso, the company's chief financial officer.

These longer-term agreements include guarantees that get Sandisk paid even if a customer decides to walk away from the deal. Combined with a stronger balance sheet, the protections limit the downside for the company and its shareholders.

"We want to get rid of the cyclicality or at least dampen the cyclicality," Goeckeler said. "Or at least when the cyclicality comes, have different techniques to deal with it than we have in the past."

Growing confidence from investors that downturns won't be as painful as they used to be could boost Sandisk shares even further. Remarkably, while the stock has surged 3,500% in a year, it trades at 8.5 times projected 12-month earnings -- the same multiple as a year ago.

Write to Nate Wolf at nate.wolf@barrons.com

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May 20, 2026 14:01 ET (18:01 GMT)

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