Multiple Wall Street investment banks have successively raised their target prices for flash memory manufacturer SanDisk (SNDK). In its latest research report, Bank of America Merrill Lynch significantly increased its target price from $125 to $230 while maintaining a “Buy” rating. The bank’s analysts pointed out that in the context of an AI-driven storage super cycle, this NAND supplier’s price-to-book valuation multiple deserves to be reassessed to a range of 3 to 4 times. At the same time, Mizuho Securities and Jefferies had earlier raised their target prices to $215 and $180, respectively, both maintaining positive ratings. Driven by this optimistic sentiment, SanDisk’s stock price has surged by over 500% in the past three months, making it one of the most outstanding performers in the U.S. stock market during the same period.
The rapid expansion of the enterprise solid-state drive (eSSD) market is a key driver of SanDisk’s growth. Analysis by Bank of America Merrill Lynch shows that the data center business has doubled its contribution to SanDisk’s revenue in the first half of fiscal 2025, reaching approximately 12%. It is expected that the cloud market will continue to exhibit double-digit growth in fiscal 2026 and 2027, and SanDisk is poised to further expand its market share. eSSD products, with their high gross margin characteristics—close to 50%—are significantly optimizing the company’s profit structure. Although their bit shipment share is only in the mid-single digits, this business is expected to contribute nearly one-third of the company’s total gross profit. This shift toward a higher-value product portfolio effectively enhances SanDisk’s pricing resilience in an environment where overall NAND average selling prices are under pressure. Additionally, the shortage of HDDs is objectively boosting demand for eSSDs, making SanDisk’s consolidated NAND average selling price outlook “significantly better” than the previously expected mid-single-digit compound annual decline.
The current supply-demand imbalance in the NAND flash market is another important basis for valuation reassessment. The construction boom in AI data centers, coupled with supply shortages in both NAND and HDDs, is driving storage manufacturers’ gross margins toward historical highs.
SanDisk’s recent financial data confirms the market’s optimistic expectations. Its first-quarter revenue reached $2.31 billion, a 21% increase quarter-over-quarter, exceeding market expectations. On a non-GAAP basis, diluted earnings per share were $1.22. Particularly noteworthy is the 26% quarter-over-quarter growth in data center business revenue. Currently, the company has two hyper-scale data center customers in the certification phase and plans to onboard a third data center and a top-tier storage OEM in fiscal 2026, while also establishing partnerships with five large hyper-scale data center customers. In terms of technology, advanced BiCS8 technology already accounts for 15% of total shipments and is expected to represent over half of the production capacity by the end of fiscal 2026. For the second quarter, the company provided revenue guidance of $2.55 billion to $2.65 billion, with non-GAAP earnings per share projected between $3.00 and $3.40. This robust outlook aligns with Wall Street’s reassessment, collectively painting a positive development picture for SanDisk amid the AI storage wave.
