Sandisk (NASDAQ: SNDK) has been a exceptional story. While some could affiliate the title with a client division that sells aftermarket reminiscence or storage, it has grow to be one in all the hottest shares in the synthetic intelligence (AI) realm over the previous few years. It has even rallied a lot that it’s being included in the Nasdaq-100.
By inventory efficiency, Sandisk could be 2026’s greatest AI winner. But previous returns do not essentially make it a purchase right this moment. Can Sandisk hold its rally going after such a robust run?
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If you invested $10,000 into Sandisk’s inventory at the begin of 2026, congratulations: That funding is now value practically $40,000. Now, what for those who had invested $10,000 at the begin of 2025? That funding would now be value over $250,000. That’s a exceptional rally in a short while body, and it was hiding underneath most buyers’ noses.
Sandisk has two main choices that have an effect on its AI funding thesis: reminiscence and storage. Both of those elements play a key function in its funding thesis. Right now, we’re in an enormous reminiscence demand crunch, and a number of other reminiscence suppliers can not come near assembly the calls for that cutting-edge AI chips are putting on their {hardware}. So, as firms like Sandisk race to supply extra reminiscence, its stable state drives (SSDs) enterprise is booming. Basically, as an alternative of utilizing elevated reminiscence that no one has entry to, AI firms are utilizing SSDs as a location to put extra data that may be shortly accessed when wanted. The most well-liked methodology is to make the most of elevated reminiscence capability, however using SSDs from Sandisk can also be an awesome possibility.
Massive demand for each of Sandisk’s key merchandise has put the firm in a robust place and allowed it to ship 61% year-over-year progress in its newest quarter. What’s much more spectacular is its diluted earnings per share, which rose 404% 12 months over 12 months. Because demand for SSDs and reminiscence is hovering, so are the costs of these elements, which Sandisk is holding a minimize of for itself. This mechanism permits income to extend sooner than income, which is boosting Sandisk’s inventory.
However, this all comes at a value. Sandisk’s inventory now trades at 20.5 occasions ahead earnings, which can look like a reasonably regular price ticket.
But Sandisk operates in a cyclical enterprise, so as soon as the reminiscence crunch is found out, the premium value it is charging will drop, affecting earnings, and crushing its valuation.
