Things are going very well for Sandisk (SNDK +0.10%) and its shareholders. Soaring demand for memory from AI data centers has caused a shortage, driving memory prices much higher.
Sandisk's sales and earnings have skyrocketed as a result, sending the stock up 2,900% over the past year. Yes, you read that correctly: 2,900%.
While there's likely more growth ahead for the stock as memory demand and prices continue to rise, it's unlikely that returns over the next few years will be anywhere near as impressive as those of the past 12 months. Here's why.
Image source: The Motley Fool.
Sandisk's future may not match its past
I'll say up front that I think Sandisk stock is still worth owning, and that if you're considering buying it right now, it's probably a good idea. Western Digital, which bought it in 2016, spun it back off in early 2025, and Sandisk has operated as an independent, publicly traded company since then.
Sandisk sells NAND flash memory, which is heavily used in AI data centers. The world's largest tech companies are still ramping up their capital expenditures for AI, with spending expected to rise from $750 billion this year to $1 trillion next year.
This is causing a huge surge in demand for the memory solutions that Sandisk sells, and that sent the company's revenue, earnings, and margins soaring over the past year. While Sandisk's revenue surged by 175% to $20.2 billion in its recently completed fiscal 2026, its non-GAAP net income rose from just $2.99 per share to $70.88 per share.
What's more, Sandisk's margins skyrocketed from just 30% in fiscal 2025 to 71.5% the following year.
That's impressive and rapid growth across every metric, and it has all been fueled by AI. However, with such phenomenal growth already behind it, it likely won't be able to deliver similar relative gains, even though strong demand for AI memory persists.
NASDAQ: SNDK
Key Data Points
Sandisk will continue growing over the next three years, just not as much
"The memory industry has been structurally transformed by the proliferation of AI," Sandisk CEO Sanjay Mehrotra said earlier this year. "We are only in the early innings of the significant innovation and productivity that can be unleashed in every part of the global economy over time."
A study from Counterpoint Research predicts that memory shortages will last through 2027 and even beyond. Former Apple CEO Tim Cook called the memory shortage a "100-year flood" because of the challenge it poses to consumer tech companies.
Clearly, we're still in a unique period for the memory market. This will likely keep Sandisk's margins elevated for a while, making its earnings impressive for the foreseeable future. With Sandisk stock trading at just 20 times its trailing 12-month earnings -- compared to the tech sector's average of about 35 -- the company's shares look cheap right now.
All this makes Sandisk stock worth owning. Just don't expect it to match the returns of the past 12 months. That would simply be too high a bar for it to clear.
