With all the ongoing artificial intelligence (AI) hype, and as the "Magnificent Seven" stocks receive much of the attention, one stock has seemingly flown under the radar: Sandisk (SNDK 5.88%).
Since spinning off from Western Digital in February 2025 and making its second appearance on the stock market, Sandisk stock has been on a roll. It's up nearly 1,030% over the past 11 months and was the S&P 500's best-performing stock in 2025.
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Why has Sandisk's stock exploded?
By spinning off from Western Digital, Sandisk has been able to double down on its core storage device business. The company makes devices that store and retrieve large amounts of data at very high speeds. This aligns well with current AI infrastructure build-outs because data centers require vast amounts of storage.
The more complex AI becomes, the more data it'll need to store and use, and the more high-speed storage devices will be needed. Unfortunately for companies building data centers, the supply of these storage devices hasn't kept pace with demand. Fortunately for Sandisk, this supply shortage allowed it to raise prices and hit its cash goal six months before its target date.
Data center revenue is still only around 12% of Sandisk's total revenue, but it's likely going to be its largest growth driver in the coming years. Many hyperscalers (like major cloud providers) are expected to collectively spend hundreds of billions of dollars in the coming years.
Of course, all these billions won't trickle down to Sandisk, but as a vital piece of the pipeline, it stands to gain a good amount from this spending.
NASDAQ: SNDK
Key Data Points
Is Sandisk a buy to begin the year?
Anytime a stock jumps over 1,000% in a short period, investors rightfully get hesitant about investing, fearing a correction or sharp drop. It's no different in Sandisk's situation.
Sandisk is currently trading at 30.8 times its projected earnings for the next year, which most analysts would consider expensive. It's not as expensive as AI hardware companies like Nvidia (39.7) and Intel (78.2), but it's higher than tech staples like Alphabet (29.3) and Microsoft (28.3).
That said, many factors are working in Sandisk's favor right now. I wouldn't invest a lump sum in the company, but dollar-cost averaging to slowly and steadily build a stake can be a good approach. Its business is well positioned to maintain its momentum, but long-term growth will depend on AI demand remaining strong.
