SNDK Jumps 168% Year to Date: Is There More Room for the Stock to Run?

Sandisk SNDK shares have jumped 167.7% in the year-to-date period, outperforming the Zacks Computer Storage industry’s return of 51.6% and the Zacks Computer and Technology sector’s decline of 11.5%. The company has outperformed its storage peers, including Western Digital WDC, Seagate STX and Micron Technology MU, over the same time frame, shares of which have returned 57%, 42.3% and 17.9%, respectively.

Will the momentum in Sandisk stock continue? Let us find out.

SNDK Stock’s Price Performance

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Strong Data Center Demand to Aid SNDK’s Prospects

Sandisk is benefiting from strong demand for NAND storage products, which has transitioned from a commodity, cyclical market to a strategic, AI-driven infrastructure layer. Data centers, including hyperscalers, are replacing consumer devices as the largest buyers of NAND, with demand expected to grow more than 60% within a year. This structural change bodes well for SNDK as long-term contracts and higher pricing stability improve top-line growth as well as margin expansion visibility for investors.

NAND is the most scalable storage semiconductor, making it essential in AI architectures. NAND usage is driven by the need for higher storage per workload and the growing deployment of larger models. SNDK is riding on an accelerating enterprise SSD demand based on the aforesaid factors. The company is seeing strong adoption across all types of AI infrastructure builders, including cloud hyperscalers, edge and enterprise data centers, OEMs and system integrators who are deploying AI at scale. Increasing demand for high-bandwidth flash (HBF) for AI-inference offers a strong growth opportunity over the long term.

The growing need for fast, high-density storage infrastructure places enterprise SSDs at the center of AI infrastructure buildouts. Sandisk’s expanding presence in this segment is supported by next-generation PCIe Gen5 drives and the forthcoming BiCS8 QLC Stargate solution. This is driving a clear shift in SNDK’s revenue mix toward higher-value data center deployments, signaling a structural pivot beyond traditional end markets. Data Center revenues jumped 64% sequentially and 76% year over year to $440 million in the second quarter of fiscal 2026. Moreover, continuing supply constraints due to limited capacity additions, high capital expenditure, and long build cycles bode well for Sandisk’s long-term prospects. The company intends to maintain its capital spending plan, which supports mid- to high-teens bit growth through the BiCS8 transition.

In the edge end-market, demand-supply imbalance is continuing due to ongoing replacement cycles and strong AI adoption across PCs and mobile devices. Richer configurations in these devices are driving higher storage content per device. Mix shift toward premium products and higher-value configurations is supporting SNDK’s storage content growth and profitability in the consumer end-market. The launch of SANDISK Extreme Fit, its smallest high-capacity USB-C flash drive, is expected to drive consumer revenues (up 39% sequentially and 52% year over year to $907 million in the second quarter of fiscal 2026).

SNDK Offers Positive Q3 Guidance

For the third quarter of fiscal 2026, Sandisk expects non-GAAP revenues between $4.40 billion and $4.80 billion. The company anticipates the market to be more undersupplied than it was in the second quarter and expects bits to be down mid-single digits. Gross margin is anticipated in the 65% to 67% range (up from 51.9% reported in the second quarter of fiscal 2026) while earnings are expected between $12.00 and $14.00 per share.

In this context, Western Digital expects non-GAAP gross margin in the range of 47-48% (indicating a rise of 46.1% in the fiscal second quarter) and non-GAAP earnings of $2.30 (+/- 15 cents) per share for the third quarter of fiscal 2026. Seagate expects non-GAAP earnings of $3.40 per share (+/- 20 cents) for the third quarter of fiscal 2026. Micron expects a non-GAAP gross margin of approximately 81% and earnings to be $19.15 (+/- 40 cents) for the same time frame.

The Zacks Consensus Estimate for Sandisk’s third-quarter fiscal 2026 earnings is pegged at $13.68 per share, up 17.7% over the past 30 days. Sandisk reported a loss of 30 cents in the year-ago quarter. The consensus mark for third-quarter fiscal 2026 revenues is pegged at $4.55 billion, suggesting 168.63% growth from the figure reported in the year-ago quarter.

Sandisk Corporation Price and Consensus

Sandisk Corporation price-consensus-chart | Sandisk Corporation Quote

Sandisk Stock Trades at a Premium

Sandisk shares are trading at a premium, as suggested by a Value Score of F.

In terms of the forward 12-month price-to-sales (P/S), Sandisk is trading at 3.56X, higher than the industry’s 2.02X and Micron’s 2.72X. However, the company is trading at a lower P/S multiple compared with Western Digital’s 6.17X and Seagate’s 6.43X.

SNDK Stock’s Valuation

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Conclusion

Sandisk is benefiting from strong AI-driven demand for NAND that is driving Data Center revenues. Demand-supply imbalance as well as shift towards premium configuration devices in edge and consumer end-markets bodes well for the company’s prospects. These factors are expected to push the stock upward and justify a premium valuation.

Sandisk currently sports a Zacks Rank #1 (Strong Buy) and a Growth Score of A, a favorable combination that offers a strong investment opportunity, per the Zacks Proprietary methodology. You can see the complete list of today’s Zacks #1 Rank stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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