Up about 435% since June, shares of Sandisk (SNDK) still offer plenty of upside opportunity.
In fact, analysts at Bank of America have a $300 price target on the stock, with a “Buy” rating. All thanks to growing demand from data centers, artificial intelligence, and a significantly undersupplied NAND memory market.
Fueling further potential upside, the NAND market could get even tighter thanks to the voracious appetite of artificial intelligence data centers that are just starting to consume a massive chunk of global memory and flash production capacity.
Analysts at Citi, for example, say NAND will be in undersupply in 2026, with some estimates putting that out to the tail end of 2027. Analysts at Bank of America are also bullish on SNDK stock, especially with NAND expected to remain undersupplied at least through 2026.
NAND Supply Can’t Keep up with Demand
We also have to consider that artificial intelligence will continue to create massive demand for data centers, which will lead to further demand for NAND. After all, NAND is a vital part of the AI infrastructure for massive amounts of data storage, speed and performance. In turn, demand for more data centers (which will need more NAND) is exploding.
According to MIT Technology Review, there are about 3,000 data centers across the U.S. Plus, according to a report from McKinsey, $5.2 trillion in AI infrastructure investments will be needed by 2030. Again, growing demand for data centers will mean growing demand for more NAND memory in an already tight market.
In addition, “As the demand for data processing and storage continues to surge, data centers are experiencing unprecedented growth. McKinsey’s analysis ‘suggests that demand for AI-ready data center capacity will rise at an average rate of 33 percent a year between 2023 and 2030 (reflecting a trend that is already underway.)’”
Given the requirements of AI data centers, demand for NAND will only rise, fueling even more upside for stocks, such as Sandisk.
Sandisk Earnings Will Remain Strong
In its most recent quarter, SNDK posted adjusted EPS of $1.22, which beat estimates by $0.33. Revenue of $2.31 billion, which was up 22.6% year over year, beat by $160 million. Analysts were expecting adjusted EPS of $0.88 on revenue of $2.15 billion.
Moving forward, SNDK expects to earn between $3 and $3.40 per share, adjusted. That’s above expectations for $1.82. Revenue is expected to range from $2.55 billion to $2.65 billion, which is also above expectations for $2.36 billion.
All numbers should improve even more with rocketing NAND and AI data center demand.
And fueling it all, AI demand itself is still growing. As I noted on Nov. 20, “Forecasts now place AI’s value between $1.7 trillion and $3.5 trillion by the early 2030s, with the most aggressive estimates topping $7 trillion by 2035. Fueling momentum, some of the largest tech companies are spending billions on AI capex.”
Even better, after pulling back from about $280 to a recent low of $183, shares of SNDK are again offering a great entry point.
In short, use recent weakness as an opportunity to accumulate shares of SNDK. The Street-high $300 target implies roughly 40% upside from here.
On the date of publication, Ian Cooper did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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