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Netlist vs. Sandisk: Which AI Memory Stock Is the Better Buy?
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Key Takeaways
Netlist's first-half 2026 revenues tripled to $214.7M as gross profit surged 1,582% to $45.3M.
Sandisk's fiscal Q4 data-center revenues rose 103% sequentially to $2.98B as AI storage demand climbed.
NLST trades at 2.33X forward sales versus 4.44X for SNDK after both posted triple-digit YTD gains.
Artificial intelligence (AI) is reshaping the memory semiconductor space as increasingly complex workloads demand higher bandwidth, greater capacity and improved power efficiency. This backdrop is driving demand for next-generation technologies such as high-bandwidth memory (“HBM”), DDR5 and NAND flash.
Netlist, Inc. (NLST - Free Report) and Sandisk Corporation (SNDK - Free Report) gain exposure to these trends in two very different ways. NLST combines memory-product sales with a substantial patent portfolio, while SNDK benefits from surging NAND requirements across AI data centers.
Both players bring their unique strengths to the table, making it an intriguing comparison for investors.
Now the question arises: which stock makes a better investment pick at present? Let us dive into the fundamentals, valuations, growth outlook and risks for each company.
The Case for NLST
Netlist's most striking strength is its recent growth trajectory. First-half 2026 revenues reached $214.7 million, roughly three times the prior-year level, while gross profit increased to $45.3 million, up 1,582%. Operating income came in at $9.9 million against a $16 million operating loss in the prior-year period. Although management noted that much of the revenues came from the resale of “difficult-to-source” DRAM products, the company is also gaining traction with its Netlist-branded offerings.
The company’s Lightning portfolio of overclocked, low-latency DDR5 RDIMM and UDIMM products has been gaining traction, as highlighted by the management.
Meanwhile, NLST's CXL NVvault solution is sampling with system-on-chip vendors, hyperscalers and key OEMs for next-generation hardware platforms. Netlist is also upbeat about MRDIMM and high-performance server memory architecture aimed at overcoming the bandwidth limitations of DDR5 RDIMMs. Management, citing industry analysts, noted that MRDIMM could be a $100 billion market by 2030.
The biggest recent development is Netlist's five-year strategic alliance with Samsung. The alliance spans patent portfolio cross-licensing, memory product supply and technology cooperation.
Under the terms, Samsung will receive access to Netlist's complete patent portfolio, including server DIMM and HBM technologies. Netlist will get DRAM and NAND supply from Samsung. More importantly, both companies agreed to settle and mutually release all pending legal actions. Samsung will also purchase 10 million shares of Netlist common stock.
The new alliance changes a contentious relationship into a long-term commercial partnership while giving Netlist access to memory supply from a major industry player. Memory availability has been constrained, and on the last earnings call, management, citing industry analysts, highlighted that these conditions could prevail through the next year.
Though the Samsung settlement substantially reduces one major legal uncertainty, it does not eliminate other lawsuits. NLST is continuing with its other patent litigation and filed a patent infringement action against Micron Technology, Supermicro, HPE and Lenovo with the United States International Trade Commission last month. NLST is seeking exclusion and cease-and-desist orders against Micron and others. Legal outcomes are inherently difficult to forecast and can produce significant volatility.
Much of Netlist's revenue growth has come from reselling “difficult-to-source” DRAM rather than from its branded products. Netlist's next-generation technologies remain at different stages of commercialization and investors will be watching closely whether new products such as CXL NVvault and MRDIMM can translate into meaningful revenue contributions.
The Case for Sandisk
Sandisk enters the comparison with considerably stronger scale and financial momentum. Sandisk became an independent publicly traded company after Western Digital separated its HDD and Flash businesses into two companies, each focused on its respective market. Sandisk manages the Flash business.
AI is becoming an increasingly important part of Sandisk's mix. Datacenter represented about 38% of the company's bits exiting fiscal 2026, up from about 12% a year earlier, making it Sandisk's fastest-growing end market. Demand for NAND storage products is increasing rapidly as investments in data centers and AI infrastructure ramp up.
For the fourth quarter of fiscal 2026, Datacenter revenues rose 103% sequentially to $2.98 billion, while Edge revenues increased 48% to $5.43 billion. Total revenues surged 51% sequentially and 372% year over year to $8.97 billion. First-quarter fiscal 2027 revenues are expected to be in the range of $10.3-$10.8 billion, supported by bit growth and higher pricing.
Sandisk is benefiting from its BiCS technology across TLC and QLC, while high-bandwidth flash also represents a longer-term opportunity. The company also started shipping the QLC Stargate platform, which expands its portfolio across performance-intensive compute workloads and high-capacity AI data lakes.
A key differentiator in Sandisk’s strategy is the introduction of the new business models (NBMs), which are reshaping its revenue visibility. Sandisk added that it has signed NBMs with eight customers, representing roughly 50% of bits in fiscal 2027 and nearly two-thirds of bits in fiscal 2028. The agreements carry minimum expected revenues of $93.9 billion based on floor pricing, providing an unusually strong level of forward demand visibility.
Profitability is also impressive. In the last reported quarter, non-GAAP operating margin rose to 79.2% from 70.9% in the previous quarter, reflecting strong revenue growth. Adjusted free cash flow totaled $5.04 billion, representing a 56% margin. Sandisk also repurchased $4.5 billion of stock during the quarter, and its board subsequently authorized an additional $14 billion repurchase program. The company ended the quarter with $4.76 billion in cash and cash equivalents.
Sandisk’s 2026 Investor Day added further visibility to its long-term AI-driven growth story. Management highlighted that AI inference and the increasing use of KV cache are making data centers significantly more storage-intensive, with the addressable market for enterprise data-center flash projected to reach 1.2 zettabytes by 2030.
Sandisk also discussed its longer-term financial framework. For fiscal 2028 through fiscal 2030, management expects revenues to grow at a mid-to-high-teens rate, broadly consistent with bit growth. During this period, it expects non-GAAP gross margins of around 80%, non-GAAP operating margins of approximately 75% and adjusted free cash flow margins of roughly 50%. Management also intends to return 100% of excess cash to shareholders after investing in the business.
However, the company continues to face cyclicality in its Consumer business. Consumer revenues declined 32% sequentially to $556 million in the fiscal fourth quarter. Management also expects smartphone and PC unit shipments to decline by the mid-teens this year. Product roadmap execution, potential supply-chain disruptions and intense competition in the memory space remain concerns. Sandisk expects customer demand to grow faster than supply and says bits will remain on allocation beyond calendar 2027.
Price Performance & Valuations of NLST & SNDK
Year to date, both NLST and SNDK have registered triple-digit gains. NLST is up 430.7% while SNDK is up 553.8%.
Image Source: Zacks Investment Research
Netlist is trading at a forward 12-month price/sales multiple of 2.33X, lower than SNDK's 4.44X.
Image Source: Zacks Investment Research
How Do the Consensus Estimates Compare for NLST & SNDK?
Analysts have revised their earnings estimates significantly upward for NLST for the current year in the past 60 days.
Image Source: Zacks Investment Research
Estimates have been revised up 9.5% for SNDK's bottom line for the current fiscal year.
Image Source: Zacks Investment Research
NLST or SNDK: Which Is a Better Pick?
NLST currently has a Zacks Rank #2 (Buy) and SNDK carries a Zacks Rank #3 (Hold).
In terms of the Zacks Rank, NLST appears to be a better pick now.
View the Zacks #1 Rank List
Image: Bigstock
Netlist vs. Sandisk: Which AI Memory Stock Is the Better Buy?
Key Takeaways
Artificial intelligence (AI) is reshaping the memory semiconductor space as increasingly complex workloads demand higher bandwidth, greater capacity and improved power efficiency. This backdrop is driving demand for next-generation technologies such as high-bandwidth memory (“HBM”), DDR5 and NAND flash.
Netlist, Inc. (NLST - Free Report) and Sandisk Corporation (SNDK - Free Report) gain exposure to these trends in two very different ways. NLST combines memory-product sales with a substantial patent portfolio, while SNDK benefits from surging NAND requirements across AI data centers.
Both players bring their unique strengths to the table, making it an intriguing comparison for investors.
Now the question arises: which stock makes a better investment pick at present? Let us dive into the fundamentals, valuations, growth outlook and risks for each company.
The Case for NLST
Netlist's most striking strength is its recent growth trajectory. First-half 2026 revenues reached $214.7 million, roughly three times the prior-year level, while gross profit increased to $45.3 million, up 1,582%. Operating income came in at $9.9 million against a $16 million operating loss in the prior-year period. Although management noted that much of the revenues came from the resale of “difficult-to-source” DRAM products, the company is also gaining traction with its Netlist-branded offerings.
The company’s Lightning portfolio of overclocked, low-latency DDR5 RDIMM and UDIMM products has been gaining traction, as highlighted by the management.
Meanwhile, NLST's CXL NVvault solution is sampling with system-on-chip vendors, hyperscalers and key OEMs for next-generation hardware platforms.
Netlist is also upbeat about MRDIMM and high-performance server memory architecture aimed at overcoming the bandwidth limitations of DDR5 RDIMMs. Management, citing industry analysts, noted that MRDIMM could be a $100 billion market by 2030.
The biggest recent development is Netlist's five-year strategic alliance with Samsung. The alliance spans patent portfolio cross-licensing, memory product supply and technology cooperation.
Netlist, Inc. Revenue (Quarterly)
Netlist, Inc. revenue-quarterly | Netlist, Inc. Quote
Under the terms, Samsung will receive access to Netlist's complete patent portfolio, including server DIMM and HBM technologies. Netlist will get DRAM and NAND supply from Samsung. More importantly, both companies agreed to settle and mutually release all pending legal actions. Samsung will also purchase 10 million shares of Netlist common stock.
The new alliance changes a contentious relationship into a long-term commercial partnership while giving Netlist access to memory supply from a major industry player. Memory availability has been constrained, and on the last earnings call, management, citing industry analysts, highlighted that these conditions could prevail through the next year.
Though the Samsung settlement substantially reduces one major legal uncertainty, it does not eliminate other lawsuits. NLST is continuing with its other patent litigation and filed a patent infringement action against Micron Technology, Supermicro, HPE and Lenovo with the United States International Trade Commission last month. NLST is seeking exclusion and cease-and-desist orders against Micron and others. Legal outcomes are inherently difficult to forecast and can produce significant volatility.
Much of Netlist's revenue growth has come from reselling “difficult-to-source” DRAM rather than from its branded products. Netlist's next-generation technologies remain at different stages of commercialization and investors will be watching closely whether new products such as CXL NVvault and MRDIMM can translate into meaningful revenue contributions.
The Case for Sandisk
Sandisk enters the comparison with considerably stronger scale and financial momentum. Sandisk became an independent publicly traded company after Western Digital separated its HDD and Flash businesses into two companies, each focused on its respective market. Sandisk manages the Flash business.
AI is becoming an increasingly important part of Sandisk's mix. Datacenter represented about 38% of the company's bits exiting fiscal 2026, up from about 12% a year earlier, making it Sandisk's fastest-growing end market. Demand for NAND storage products is increasing rapidly as investments in data centers and AI infrastructure ramp up.
For the fourth quarter of fiscal 2026, Datacenter revenues rose 103% sequentially to $2.98 billion, while Edge revenues increased 48% to $5.43 billion. Total revenues surged 51% sequentially and 372% year over year to $8.97 billion. First-quarter fiscal 2027 revenues are expected to be in the range of $10.3-$10.8 billion, supported by bit growth and higher pricing.
Sandisk is benefiting from its BiCS technology across TLC and QLC, while high-bandwidth flash also represents a longer-term opportunity. The company also started shipping the QLC Stargate platform, which expands its portfolio across performance-intensive compute workloads and high-capacity AI data lakes.
Sandisk Corporation Revenue (Quarterly)
Sandisk Corporation revenue-quarterly | Sandisk Corporation Quote
A key differentiator in Sandisk’s strategy is the introduction of the new business models (NBMs), which are reshaping its revenue visibility. Sandisk added that it has signed NBMs with eight customers, representing roughly 50% of bits in fiscal 2027 and nearly two-thirds of bits in fiscal 2028. The agreements carry minimum expected revenues of $93.9 billion based on floor pricing, providing an unusually strong level of forward demand visibility.
Profitability is also impressive. In the last reported quarter, non-GAAP operating margin rose to 79.2% from 70.9% in the previous quarter, reflecting strong revenue growth. Adjusted free cash flow totaled $5.04 billion, representing a 56% margin. Sandisk also repurchased $4.5 billion of stock during the quarter, and its board subsequently authorized an additional $14 billion repurchase program. The company ended the quarter with $4.76 billion in cash and cash equivalents.
Sandisk’s 2026 Investor Day added further visibility to its long-term AI-driven growth story. Management highlighted that AI inference and the increasing use of KV cache are making data centers significantly more storage-intensive, with the addressable market for enterprise data-center flash projected to reach 1.2 zettabytes by 2030.
Sandisk also discussed its longer-term financial framework. For fiscal 2028 through fiscal 2030, management expects revenues to grow at a mid-to-high-teens rate, broadly consistent with bit growth. During this period, it expects non-GAAP gross margins of around 80%, non-GAAP operating margins of approximately 75% and adjusted free cash flow margins of roughly 50%. Management also intends to return 100% of excess cash to shareholders after investing in the business.
However, the company continues to face cyclicality in its Consumer business. Consumer revenues declined 32% sequentially to $556 million in the fiscal fourth quarter. Management also expects smartphone and PC unit shipments to decline by the mid-teens this year. Product roadmap execution, potential supply-chain disruptions and intense competition in the memory space remain concerns. Sandisk expects customer demand to grow faster than supply and says bits will remain on allocation beyond calendar 2027.
Price Performance & Valuations of NLST & SNDK
Year to date, both NLST and SNDK have registered triple-digit gains. NLST is up 430.7% while SNDK is up 553.8%.
Image Source: Zacks Investment Research
Netlist is trading at a forward 12-month price/sales multiple of 2.33X, lower than SNDK's 4.44X.
Image Source: Zacks Investment Research
How Do the Consensus Estimates Compare for NLST & SNDK?
Analysts have revised their earnings estimates significantly upward for NLST for the current year in the past 60 days.
Image Source: Zacks Investment Research
Estimates have been revised up 9.5% for SNDK's bottom line for the current fiscal year.
Image Source: Zacks Investment Research
NLST or SNDK: Which Is a Better Pick?
NLST currently has a Zacks Rank #2 (Buy) and SNDK carries a Zacks Rank #3 (Hold).
In terms of the Zacks Rank, NLST appears to be a better pick now.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.