Up more than 4,000% over the past year and about 570% so far in 2026, Sandisk (SNDK 1.98%) stock has been one of the most extraordinary winners in the artificial intelligence (AI) build-out. The NAND flash memory specialist, which only began trading on its own in February 2025 after being spun off from Western Digital, has climbed from a 52-week low of about $36 to a closing price near $1,590 as of this writing.
With shares at an all-time high and a market value above $230 billion, has the easy money been made?
Maybe. But the more interesting question is whether the underlying business has actually changed enough to justify thinking about this as something more than a typical memory-cycle peak.
Image source: Getty Images.
An AI-led shift in the business
The headline numbers from Sandisk's fiscal third quarter (the period ended April 3, 2026) were staggering. Revenue jumped 251% year over year to $5.95 billion, up 97% from the prior quarter alone.
Profitability moved even faster. Sandisk's non-GAAP (adjusted) gross margin reached 78.4%, up from 51.1% in fiscal Q2 and just 22.5% in the year-ago period. And the company's adjusted earnings per share came in at $23.41 -- well above management's own forecast of $12 to $14.
Driving this growth, data center revenue hit $1.47 billion in fiscal Q3, up 233% sequentially and roughly 645% from the year-ago period. Capturing the staggering sequential momentum of the segment, three months earlier that same segment had grown about 64% sequentially.
The acceleration reflects a deliberate redirection of the company's bit supply toward higher-value AI infrastructure customers.
Management is now formalizing that redirection through what it calls New Business Models (NBMs) -- multi-year supply contracts backed by firm financial guarantees. Sandisk ended fiscal Q3 with three signed NBMs and has added two more since, bringing the total to five. The three signed during the quarter alone carry about $42 billion in remaining performance obligations (RPO), and the five together include more than $11 billion in financial guarantees. Together, they cover more than a third of the company's bit supply for fiscal 2027.
CEO David Goeckeler explained why customers are willing to commit.
"We run a fab. We have very consistent output. We need very consistent consumption," he said on the company's fiscal third-quarter earnings call.
In short, customers get close to what is "locked-in" supply -- and Sandisk gets unusual visibility into demand, with real money on the line if a customer walks.
There's also a product catalyst still in front of investors. Management plans to begin shipping QLC Stargate solid-state drives -- designed for high-density AI workloads -- for revenue this fiscal fourth quarter.
OTC: SSNLF
Key Data Points
What's already priced in
But there's a lot priced in.
Sandisk's price-to-earnings ratio now sits above 50. Of course, the company's trailing earnings aren't very representative of its earnings power today. But even its forward price-to-earnings ratio in the mid-twenties represents a valuation that prices in strong earnings growth for years to come.
NAND has historically been one of the most cyclical segments of the semiconductor industry. And Goeckeler himself has acknowledged that long-term memory contracts have unraveled before during downturns. The NBMs are designed to make this cycle different, but they're also new and include variable pricing components, meaning a meaningful drop in spot pricing could still flow through to results.
Competition is another consideration. A faster-than-expected supply response from rivals like Samsung or SK Hynix, or any softening in cloud-provider capital spending -- would likely weigh on the business and the stock.
So yes, Sandisk is structurally a different company than it was a year ago, and its soaring stock price makes sense in hindsight. The contracts, the data center mix, the cash generation, and the recently authorized $6 billion share repurchase program all support that idea. But at this price, an investor is essentially paying for the new Sandisk while still inheriting the risks of the old one, namely, cyclicality. With all of this said, for those who want exposure to the AI memory build-out from here, keeping any position relatively small could make sense.
