Seeing a chip stock that most casual investors had given up on suddenly rise to prominence on Wall Street is almost surreal. SanDisk ended Friday’s trading session at $1,562.34, up more than 16%. The stock was trading close to $36 a year ago. Go over that twice. At the time, the company was essentially a part of Western Digital and was viewed by many analysts as the slower, less fascinating half of the company.
It is currently valued at over a quarter of a trillion dollars. Anyone following the AI buildout is already aware of the reasons, but the scope of what’s taking place still seems underestimated. In the arms race for artificial intelligence, memory and storage have subtly emerged as the second front. Naturally, Nvidia makes the headlines, but racks of NAND flash and high-bandwidth DRAM are doing their own heavy lifting inside the data centers being built throughout Virginia, Arizona, and rural Ireland. It happens to be produced in large quantities by SanDisk.
The most recent quarter is the kind of figure that puts an end to discussions. $5.95 billion in revenue, a 3.5-fold increase from the previous year. $23.41 per share in adjusted earnings compared to a loss at the same time last year. It’s difficult to ignore how rapidly the narrative surrounding this business has changed from that of a “legacy flash maker hoping to survive” to that of a structural beneficiary of an industry-wide shortage. According to estimates from Gartner, NAND prices may increase by up to 234% in just 2026. It remains to be seen if that holds. However, the directional signal is clearly visible.
You can practically sense the shift in atmosphere when you stroll through the parking lot of one of these chip campuses in Milpitas. The workers, the recently painted shuttle buses, and the brand-new construction equipment sitting close to the back lots. There is a feeling that a business that previously believed it to be middle-aged is now told it is youthful once more.
Investors appear to think that the supply constraint is genuine and long-lasting. Long-term supply agreements valued at an estimated $42 billion give the narrative more substance than just vibes. In the most recent quarter alone, three of those contracts were awarded. The market’s perception of a cyclical business is often altered by that type of backlog, at least temporarily. Depending on your level of confidence in the anticipated earnings explosion—which some analysts estimate will grow by more than 500% this fiscal year—SanDisk may or may not deserve a forward P/E of roughly 23 to 28 times.
Not everyone is persuaded. There are voices cautioning that memory has done this in the past, soaring on stories of shortages before collapsing when capacity eventually caught up. The former parent company, Western Digital, recently announced that it is selling its remaining SanDisk stake. This could be interpreted as a standard portfolio cleanup or as a sign that even those closest to the asset believe the easy money has been made. Whether the AI demand story will continue to absorb supply more quickly than factories can add it is still up in the air.
Additionally, there is the issue of absolute valuation. Citing fiscal 2027 earnings projections, some optimistic analysts have set price targets close to $4,000. Some are more circumspect, pointing out that the current quote is actually below the consensus targets, which is unusual and a little awkward. It tends to mean estimates haven’t caught up to reality. Or that reality has overtaken itself.
As you watch this develop, it seems like the market is still trying to figure out what SanDisk is. A producer of cyclical commodities? A play on specialized AI infrastructure? A tale of short-term pricing power? Perhaps a little of each of the three. The one-year gain of 1,200% is difficult to categorize.
The rally has its own gravity for the time being. A Japanese peer named Kioxia saw a 22% increase in sympathy. An additional 3.5% was added by Western Digital. Micron, a market favorite already, saw a 15% increase. Similar to how semiconductors were in late 2023 and storage briefly was in 2017, there is a sense that the memory industry as a whole has been re-rated almost overnight. This is how things typically go, until they don’t.