Shares of NAND flash drive maker Sandisk (NASDAQ: SNDK) rallied 12% in November, according to data from S&P Global Market Intelligence.
Sandisk came into November already having posted tremendous gains in 2025, so to see it appreciate another 12% versus a relatively flat S&P 500 was truly impressive.
We are experiencing a historic supply crunch regarding memory and storage, as the generative AI revolution drives demand in both data centers and at the edge, where NAND outshines other storage mediums as the preferred choice.
Sandisk's strong third-quarter earnings and guidance released on November 6 were a reflection of that.
NASDAQ: SNDK
Key Data Points
Sandisk beats estimates and guides for skyrocketing earnings
In the third quarter, Sandisk saw revenue rise 23% year-over-year as flash prices stabilized. While earnings per share actually declined 33% year-over-year, this was due to industry-standard start-up costs associated with ramping up Sandisk's new BiCS8 technology.
Still, the quarter-over-quarter momentum was strong, with adjusted (non-GAAP) earnings per share increasing by 321%, from $0.29 to $1.22 per share. Both revenue and adjusted earnings beat expectations.
Furthermore, management guided for strong sequential growth to continue, forecasting $2.55 billion to $2.65 billion in revenue and between $3.00 and $3.40 in adjusted earnings, which would amount to 162% sequential growth at the midpoint.
Memory and storage manufacturers are experiencing a significant earnings boom because many of their costs are fixed, due to the high costs associated with building and owning large production fabs. So when memory or storage prices rise or stabilize -- prices per bit usually decline over the long term -- much of those gains fall straight to the bottom line.
NAND flash prices have been in a particularly severe oversupply for years now, as the vertical stacking of NAND bits has made it too easy for all five major players to increase supply. Yet, just as major manufacturers began to cut back on supply, AI inferencing at the edge, combined with this year's PC rebound, is leading to an unexpected surge in demand.
Image source: Getty Images.
Sandisk appears cheap, but investors should be cautious
Analysts now anticipate $20.21 in fiscal 2027 earnings per share, which would only put the stock at 10.2 times next year's earnings estimates. That may seem incredibly cheap to tech investors, especially since the stock has risen an impressive 505% this year.
However, investors should be aware of the boom-and-bust nature of NAND flash pricing, which occurs with highly uncertain timing. In fact, while the average 2027 estimate is $20.81, those estimates encompass an extremely wide range, between $9.37 and $28.15.
Therefore, for investors to buy after this tremendous rally, they would have to believe that outsized AI demand will continue to rise, combined with disciplined supply growth. The NAND flash industry has a tough history of over-investing on supply, which is very difficult to time accurately. To invest today, one has to conclude the current AI revolution will make this cycle different. That's an open question.
