The stock price of NAND flash specialist Sandisk (SNDK) experienced a remarkable surge in January this year, with a single-month increase of 143%. This performance has made it a focal point within the storage sector and the entire semiconductor industry. The core driver behind the stock price rise stems from the explosion in storage demand triggered by the artificial intelligence (AI) boom and the subsequent price increases.
Data shows that Sandisk’s stock price recorded gains on almost every trading day in January. Among them, the increase on January 6th was particularly notable. On that day, NVIDIA CEO Jensen Huang publicly stated that AI storage is a “completely unmet market” and predicted it would become the world’s largest data storage market. This remark directly ignited market enthusiasm. Simultaneously, industry analysis firm TrendForce pointed out that NAND flash contract prices are expected to rise by 33% to 38% in the first quarter.
Shortly after, Nomura released a report stating that Sandisk would double the prices of its high-capacity 3D NAND storage devices used in solid-state drives this quarter. This news once again propelled the stock price upward. Throughout January, multiple Wall Street analysts successively raised their target prices for Sandisk, reflecting expectations for rising storage prices and tight supply.
The second-quarter earnings report released at the end of January provided solid support for this rally. The report showed that Sandisk’s quarterly revenue reached $3.03 billion, a 31% increase quarter-over-quarter and a significant 61% increase year-over-year, far exceeding the market consensus expectation of $2.69 billion. Adjusted earnings per share jumped from $1.23 in the same period last year to $6.20, also substantially surpassing expectations.
The improvement in profit margins was even more astounding. Benefiting from price increases, the company’s adjusted gross margin significantly improved from 32.5% to 51.1%. CEO David Goeckeler specifically emphasized: “Our products play a crucial role in driving AI development.”
Behind the strong performance lies the urgent demand for high-performance storage solutions brought about by the rapid construction of AI data centers. Hyperscale computing companies and other major tech firms are scrambling to secure storage capacity, leading to supply shortages in the market. To address this nearly insatiable demand, Sandisk has continuously raised prices, thereby driving a surge in profit margins. In the quarter ending January 2nd, the company’s operating profit skyrocketed by 505% to $1.1 billion.
The storage industry is known for its strong cyclicality, but the current upward trend is expected to last for at least several more quarters. For the third quarter, Sandisk provided revenue guidance of $4.4 billion to $4.8 billion, with adjusted earnings per share expected to be between $12 and $14, doubling from the second quarter. As long as prices continue to rise and profits keep growing, this AI-themed stock has ample reason to climb further.
Wall Street is growing increasingly optimistic about the growth prospects of this flash memory leader. Bernstein analyst Mark Newman significantly raised his target price for Sandisk from $580 to $1,000, implying approximately 50% upside from the current stock price. Newman pointed out that Sandisk’s pricing power is strengthening amid the AI-driven demand boom. He believes that with its ability to raise product prices, the company has the potential to achieve earnings per share of $90.96 in fiscal year 2027. Notably, this earnings per share forecast is nearly 30% higher than the market consensus expectation.
As the major AI trend continues to evolve, Sandisk’s position as a core beneficiary is becoming increasingly prominent. The market is closely watching the trajectory of storage prices and the company’s ability to continually convert demand into profits, which may determine whether its stock price can reach new highs.
