Sandisk (SNDK 5.59%) was one of the market's hottest stocks over the past year, and its incredible run became even more impressive after the stock surged following its fourth-quarter earnings report. The semiconductor stock is already up more than 166% in 2026 alone, as of this writing.
Sandisk is one of the world's leading makers of NAND (flash) memory. NAND manufacturers dramatically reduced production a few years ago after a price crash, as gross margins turned negative due to oversupply. However, demand started to skyrocket as artificial intelligence (AI) data centers require huge, high-performance solid-state drives (SSDs) using flash memory to hold training data.
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Meanwhile, memory makers have been slow to resume production, with many focusing more on high-margin, high-bandwidth memory (HMB). HMB is a specialized form of DRAM (dynamic random access memory) that is essential for helping graphics processing units (GPUs) and other AI chips perform at their best. HBM also requires considerably more wafer space, which is drawing resources away from other types of memory. This is leading to a huge supercycle in the memory market where prices are skyrocketing.
Huge earnings growth
These dynamics showed up in Sandisk's fiscal Q2 results, as revenue surged 61% year over year to $3 billion. Data center revenue soared 76% to $440 million, driven by AI data center expansion and increased NAND usage per deployment. Its Edge segment, which includes smartphones and PCs, saw revenue climb 63% to $1.7 billion, while the consumer segment, which consists of things like flash drives, saw revenue jump 52% to $907 million.
The revenue growth was driven by higher NAND prices, which also greatly boosted the company's gross margins. For the quarter, gross margins climbed from 32.3% last year to 50.9%. This helped lead to a 386% surge in adjusted operating income to $1.1 billion and a 404% increase in adjusted earnings per share (EPS) to $6.20.
Looking ahead, Sandisk guided for fiscal Q3 revenue to be between $4.4 billion and $4.8 billion, up from $1.7 billion a year ago. Gross margin is expected to expand to 64.9% to 66.9%, up from 22.5% a year ago. Adjusted EPS, meanwhile, is projected to soar from a loss of $0.30 to a profit of between $12 to $14.
NASDAQ: SNDK
Key Data Points
Can the stock's momentum continue?
The NAND market can be cyclical, but right now it's in one of the biggest supercycles we've experienced, and there are no signs of it slowing down. Demand is voracious, and while the company invests to increase capacity, rivals in the space are more focused on HBM, which likely keeps the market tight for the foreseeable future.
If that proves the case, the stock's momentum can indeed continue, even after this massive run.
