Artificial intelligence (AI) uses lots of memory to process and complete its tasks, and that's been a boon to both SK Hynix (SKHY -2.36%) and Sandisk (SNDK +1.93%).
SK Hynix sells a mix of high bandwidth memory (HBM), NAND flash, and DRAM memory, and Sandisk is one of the leading NAND flash memory companies. Both are experiencing a surge in sales and earnings, helping to drive their share prices higher, and investors no doubt have both at the top of their memory stock buy list.
But which one has more potential upside over the next few years? I think SK Hynix has the upper hand in this matchup because of its diversified product line. Here's why SK Hynix stock has more potential through 2030.
Image source: The Motley Fool.
All types of memory are in demand right now
The latest McKinsey estimates show that the data center spending could reach $7 trillion by 2030. And a significant portion of that will go toward memory processors, including NAND, HBM, DRAM, and others.
SK Hynix and Sandisk already dominate their respective memory markets, with SK Hynix taking 50% of the HBM market, 19% of the NAND market, and 25% of the DRAM market. Meanwhile, Sandisk focuses exclusively on the NAND market, with 11% market share.
NASDAQ: SKHY
Key Data Points
These market positions have translated to very impressive financial results for both companies. SK Hynix's sales rose 257% to about $52.6 billion in the second quarter, and net income skyrocketed by more than 1,200%. Meanwhile, Sandisk's revenue popped 371% to $8.9 billion, and earnings swung from a loss in the year-ago quarter to net income of $6.9 billion in its fiscal 2026's fourth quarter (which ended July 3).
The surge in demand for these companies' memory processors has caused a memory shortage that won't slow down any time soon. The shortage has allowed SK Hynix and Sandisk to raise their memory prices, resulting in their operating margins reaching 76% and about 79%, respectively.
And there's likely plenty more demand on the way for both companies. Sandisk CEO David Goeckeler said on the company's Q4 earnings call that the shift toward AI agents -- as opposed to just AI training -- is "redefining storage requirements" and said later in the call that it's "a very, very robust demand environment" right now.
NASDAQ: SNDK
Key Data Points
SK Hynix's diversification could help boost its stock
While both companies are clearly benefiting from AI memory needs, I think SK Hynix's selling memory across HBM, NAND, and DRAM gives the company a clear advantage over Sandisk. Hardware components like memory often undergo boom-and-bust cycles. And while I don't think the current AI boom will create a similar bust cycle to the past, SK Hynix is better protected if one does happen because of its versatile product lineup.
What's more, SK Hynix's handful of memory products also means it benefits no matter what memory trend comes along. For example, Sandisk's leadership estimates that NAND memory could surge to $500 billion next year due to AI agentic inference needs. That's great for Sandisk, of course, but SK Hynix's diversification allows it to tap into this demand as well. And if it shifts back to HBM, SK Hynix will benefit from that, too.
SK Hynix's trailing price-to-earnings (P/E) ratio is around 11 right now, compared to Sandisk's P/E ratio of about 24. This makes SK Hynix's shares much cheaper than Sandisk's and a downright bargain compared to the tech sector's average P/E ratio of about 32. This means investors looking for a great deal on a leading memory stock with more room to run over the next four years should consider SK Hynix right now.
