Sandisk Stock: 500% Gain and Still a Multibagger?
💡 Key Takeaway
Sandisk's long-term supply agreement with Meta, combined with a massive revenue pipeline and favorable memory market dynamics, suggests the stock still has significant upside despite its 538% surge in 2026.
What Happened: Meta Locks In Sandisk for AI Memory
Meta Platforms is doubling down on its AI infrastructure. An internal memo revealed that Meta will start producing a new in-house AI chip in September and plans to double its AI compute capacity to 14 gigawatts by next year.
To support this massive build-out, Meta has entered into a long-term supply agreement with Sandisk for flash storage. This is part of a broader trend: memory chips are in short supply, with SK Hynix estimating a 4-5 year shortage and wafer demand exceeding supply by 20%.
Sandisk has been aggressively signing multi-year supply agreements. In its April earnings call, the company disclosed five such deals, three of which closed in Q3 fiscal 2026, generating at least $42 billion in revenue. Two more agreements were signed after the quarter ended, and management expects to conclude additional deals soon.
The Meta deal is the latest win for Sandisk, which has seen its stock skyrocket 538% in 2026. The company's revenue pipeline now far exceeds its trailing twelve-month revenue of $13.2 billion, and variable pricing riders allow Sandisk to capture upside if memory prices rise further.
Why It Matters: Sandisk's Revenue Visibility and Pricing Power
This news is a game-changer for Sandisk investors. The long-term agreements provide unprecedented revenue visibility. With $42 billion already locked in and more deals expected, Sandisk's future revenue stream is far more predictable than typical memory chip companies, which often face volatile pricing cycles.
The variable pricing rider is particularly important. In a memory shortage that could last 4-5 years, Sandisk can benefit from rising prices without renegotiating contracts. This could lead to significant earnings upside beyond current estimates.
Analysts have already boosted their earnings expectations. Sandisk's earnings jumped 2,124% in fiscal 2026 to $66.51 per share, and the chart suggests further growth. If earnings reach $232.88 per share in a couple of years and the stock trades at 20x earnings (a discount to the S&P 500's 21.7x), the stock price could hit $4,657.
For Meta, securing flash storage supply is critical to its AI ambitions. Without reliable memory, its data center expansion and in-house chip production could face bottlenecks. This deal ensures Meta has the components needed to double its compute capacity by next year.
Source: The Motley Fool
Analysis generated by Bobby AI quantitative model, reviewed and edited by our research team. This is not financial advice. Always do your own research before making investment decisions.
Bobby Insight
Sandisk is a strong buy with multibagger potential despite its massive 2026 gains.
The long-term supply agreements provide unprecedented revenue visibility and pricing power in a multi-year memory shortage. With a forward P/E of 25x and earnings growth accelerating, the stock still offers substantial upside. Risks include memory price normalization or a slowdown in AI spending, but the current setup favors continued outperformance.
What This Means for Me
