Sandisk’s (SNDK) strong rally has lost some steam, with SNDK stock falling more than 37% from its peak. While the sharp pullback reflects profit-taking after the stock’s substantial run-up, it has not weakened Wall Street’s view of the company.
Analysts have maintained a bullish outlook on SNDK. Analysts’ positive outlook indicates that the expansion of artificial intelligence (AI) infrastructure continues to increase demand for high-performance memory solutions, supporting Sandisk’s growth.
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Sandisk is also strengthening its customer relationships through multi-year partnerships enabled by its New Business Models (NBMs). These agreements provide greater revenue visibility and a more durable customer base, driving longer-term growth.
From a valuation perspective, SNDK’s recent decline has made the stock more attractive, especially as earnings growth remains solid.
www.barchart.com AI Demand and Tight NAND Supply to Drive Strong Growth
Sandisk has entered fiscal 2027 with strong momentum, supported by accelerating AI-driven demand, higher NAND pricing, and tight industry supply. These factors are creating a favorable operating environment that is likely to extend the company’s current growth cycle.
In the fourth quarter, Sandisk generated $8.97 billion in revenue, representing a 51% sequential increase and a 372% year-over-year (YoY) surge. Importantly, the growth was not driven by pricing alone. Roughly one-third of the sequential increase came from higher volumes, while the remaining two-thirds reflected stronger pricing. This indicates that Sandisk is benefiting from both improving demand and tighter supply conditions.
The data center business is the most significant source of growth. Revenue from this segment reached $2.98 billion, up 103% sequentially, as hyperscalers and other technology companies continue to invest heavily in AI infrastructure. Edge revenue also increased strongly, rising 48% to $5.43 billion, although consumer demand remains comparatively weak.
The data center opportunity is particularly important because AI is increasing the amount of storage required per workload. The rapid expansion of AI inference, in particular, should create sustained demand for high-capacity enterprise SSDs. As AI systems become more complex and increasingly agentic, storage demand is likely to remain solid.
Long-Term Customer Agreements Improve Revenue Visibility
At the same time, major technology companies are making longer-term infrastructure commitments. These customers need suppliers that can secure sufficient capacity, maintain product performance, and scale production alongside their expanding requirements. This makes Sandisk’s long-term supply agreements particularly valuable. These agreements provide greater visibility into future demand, allow the company to plan capacity more effectively, and could translate into more predictable revenue and cash flow growth.
Sandisk’s Growth Beyond Data Centers
While data centers are currently the primary growth driver, Sandisk’s Edge business represents another meaningful long-term opportunity. Smartphones, PCs, automotive systems, robotics, and other devices incorporating on-device AI are likely to require more storage.
Although smartphone and PC demand remains under pressure, the more important long-term trend is storage content per device. As applications become more data-intensive and AI capabilities move closer to the device, users and manufacturers are likely to demand greater storage capacity and performance. Sandisk expects these markets to return to growth in calendar 2027, which could provide an additional catalyst beyond the current data center cycle.
Sandisk’s Outlook Remains Strong
Sandisk’s near-term outlook remains solid. The company’s management expects first-quarter fiscal 2027 revenue of $10.3 billion to $10.8 billion, up from $2.31 billion reported in the prior-year quarter, with growth driven by both higher bit shipments and pricing. More importantly, customer demand is currently exceeding supply, and Sandisk expects NAND capacity to remain allocated beyond calendar 2027.
Sandisk has signed NBMs with eight customers, representing approximately 50% of bits in FY2027 and approximately two-thirds of bits in FY2028. These agreements support more predictable revenue streams, improved cash flow visibility, and durable earnings growth, further positioning Sandisk to deliver sustainable value for customers and shareholders.
The combination of AI-driven storage growth, constrained NAND supply, pricing strength, and long-term customer commitments suggests that its current growth cycle has significant room to continue.
SNDK’s Valuation Looks Compelling After the Selloff
Despite its strong fundamentals, Sandisk’s valuation remains relatively low following the recent selloff. SNDK stock currently trades at 12 times forward earnings, a compelling valuation given the company’s strong earnings outlook and favorable industry trends.
Sandisk is benefiting from AI-driven demand. Analysts expect the company’s earnings per share to grow by 201% in fiscal 2027, even against a challenging YoY comparison. If Sandisk continues to deliver on expectations, its rapid earnings growth could support a significantly higher valuation multiple over time.
Wall Street also remains optimistic about SNDK stock, with the overwhelming number of analysts recommending a “Strong Buy.”
www.barchart.com On the date of publication, Sneha Nahata did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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