Sandisk Stock Up 720%: Is the AI Rally Still a Buy?

Sandisk, a leading flash memory chipmaker, was spun off from Western Digital in February 2025. Since then, its stock has skyrocketed, gaining over 5,200% from its spin-off price.

In 2026 alone, the stock has rallied an astonishing 720%. This dramatic rise is largely due to a fundamental shift in its business model and market demand.

Previously seen as a slow-growth, cyclical company in a commoditized memory market, Sandisk's fortunes changed with the AI boom. The explosive growth in artificial intelligence forced data centers to urgently upgrade their servers with faster, higher-capacity solid-state drives (SSDs).

This created a global shortage of NAND memory chips, the core component in SSDs. Sandisk capitalized on this by launching the world's first 256TB enterprise SSD designed specifically for AI data lakes, a product that became a hit with major cloud companies.

As a result, Sandisk's financials transformed. In fiscal 2025, revenue grew 10% and its adjusted gross margin more than doubled from 14.8% to 30.3%, returning the company to profitability.

This isn't just a speculative bubble; it's a fundamental rerating of a business. Sandisk has evolved from a cyclical hardware vendor into a critical supplier for the AI infrastructure build-out, which commands higher valuations.

The financial projections underscore this shift. Analysts expect Sandisk's revenue to surge 167% and its earnings per share to explode by 2,089% in the current fiscal year 2026. Strong growth is expected to continue into 2027 as well.

This growth is being driven by multi-year contracts with hyperscalers (large cloud providers) for its high-density SSDs. These contracts provide predictable, recurring revenue, which helps insulate Sandisk from the volatile price swings that have historically plagued the memory chip market.

Most importantly, the stock's valuation hasn't caught up to this new growth profile. At current prices, Sandisk trades at only about 10 times next year's expected earnings. This is a valuation typically assigned to a stagnant, legacy chipmaker, not a company growing earnings by over 2,000%.

This disconnect between growth and price means the stock could have significant room to run if the market begins to value it as a true high-growth AI play, potentially leading to further gains.