Sandisk (SNDK +1.08%) stock gained 29% in August, according to data provided by S&P Global Market Intelligence. The company reported solid earnings, and investors seemed to believe that the previous sell-off had gone too far.
It's all about memory
Sandisk is one of few companies that produce the memory products essential for highs-speed artificial intelligence (AI) deployment. Memory scarcity has caused demand, and prices, to skyrocket, and Sandisk has emerged as a major player in AI.
In the 2026 fiscal fourth quarter (ended July 3), revenue increased 372% year over year and 51% sequentially. Gross margin widened from 26.2% last year to 84.6% this year, and earnings per share (EPS), which were negative last year, rose 91% sequentially, from $23.03 to $43.97.
Image source: Sandisk.
The outlook for the 2027 first quarter doesn't expect any slowdown. Management is guiding for $10.5 billion in revenue at the midpoint, which would be a 357% increase over last year, and for gross margin of 83% to 84.9%.
Sandisk was spun off from Western Digital in early 2025 as an unprofitable company, and it didn't catch much attention at that time. The market caught onto it early this year as data centers and the compute capacity necessary to support AI development really exploded, and Sandisk stock has gained nearly 900% this year before investors realized the price had started to lose touch with reality. After falling for a few weeks, it got renewed strength after the fourth-quarter report.
How long can the party go on?
At the current price, Sandisk stock is still up 554% year to date, and most Wall Street analysts think it will still go up; the median target price over the next 12 to 18 months is 42% higher than today.
Management recently changed its model to longer-term commitments to stabilize its supply chain, and it now has eight clients signed for its new business model (NBM) deals. It had $59.8 billion in remaining performance obligation at the end of the fourth quarter and $91.1 billion at the time of the report in early August.
NASDAQ: SNDK
Key Data Points
Most of Sandisk's growth is coming from its NAND memory products, which few companies produce and are a critical part of AI inference. Management believes that demand for NAND products is still accelerating and will reach $300 billion in 2026, triple from last year, and that it will reach $500 billion next year. So far, demand is still outstripping supply.
Sandisk stock trades at only 21 times trailing 12-month earnings, and that's lilkely to due concerns about growth already being priced into the stock and expected levelling off of demand at some point.
