When Sandisk (SNDK +3.75%) was spun off from Western Digital last year, it was generating solid, steady revenue, and most investors could not have anticipated that it would accelerate to 250% revenue growth with a mind-boggling 4,600% stock gain just a year and a half later. Those who did, or were lucky enough to buy shares on a bit of confidence, might already have been made millionaires -- a $25,000 investment at the time of the spinoff is worth nearly $1.2 million today.
It's the stuff investor dreams are made of. But now that the secret's out, and millions have already been made, is Sandisk still a millionaire-maker stock?
Image source: Sandisk.
Demand for NAND
Sandisk makes memory products, and what happened over the past year is that with the growth of generative artificial intelligence (AI), there's been an increasing need for the company's NAND flash memory products. NAND memory sits in solid-state drives that "hold" the memory so other kinds of memory chips, such as dynamic random access memory, can work on the processing end. As data centers require higher stores of data for inference, they need increasing amounts of NAND.
Intensifying the situation is the scarcity of Sandisk's products. There are few NAND producers, the other major one being Micron Technology, which is experiencing its own skyrocketing stock price. The laws of supply and demand dictate higher pricing, which is why Sandisk's revenue is soaring.
Since the pricing is coming from demand rather than rising costs, the extra revenue is going straight to Sandisk's bottom line. Gross margin expanded from 22.5% to 78.4% in the 2026 fiscal third quarter (ended April 3), and operating income increased 386%, highly outpacing revenue growth of 250%.
The top of the memory cycle?
Memory has historically been a cyclical business, and since Sandisk may be at the top of the cycle, there are concerns that demand will eventually slow and take Sandisk along with it.
Management has been developing a different model to stabilize the cyclical nature of its business, and it recently signed several deals for this new stream that it calls new business model agreements. It already has five of these deals, which are multiyear commitments.
NASDAQ: SNDK
Key Data Points
In the short term, that alleviates some of the concerns. The confidence with which companies including Nvidia and Amazon see the future, and the continued expected spending among hyperscalers, also make it seem likely that even if there still is a cycle, it's not quite at the top yet.
However, as Sandisk stock continues to climb, it's gotten much more expensive, trading at 59 times trailing-12-month sales. Even if higher growth is expected, more and more of that is getting priced into the stock.
The chance for Sandisk to turn you into a millionaire exists, if you have a lot to invest and have a strong stomach for risk. But most investors should count on safer, longer pathways, or find a stock that the market hasn't recognized yet.
