SANDISK STOCK RALLIES ON AI MEMORY CHIP DEMAND, DRIVES RECORD PROFITS

Sandisk shares have surged over 1500% in the past year due to strong AI-driven memory chip demand. The company reported a Q2 2026 revenue of $3.03 billion, up 31% sequentially, with datacenter revenue rising 64%. Sandisk’s third-quarter forecast of $4.4 billion to $4.8 billion far exceeded expectations of $2.93 billion. Memory chip shortages and AI infrastructure expansion are enabling Sandisk to maintain strong gross margins, projected between 65% and 67%. Sandisk has also increased share repurchases and dividends, signaling confidence in its financial performance.

Sandisk’s stock is on fire, driven by a surge in demand for memory chips from AI data centers. In Q2 2026, the company reported revenue of $3.03 billion, a 31% increase from the prior quarter, with datacenter revenue jumping 64% sequentially. This performance far exceeded expectations, and the company is already projecting strong results for Q3 2026, forecasting revenue of $4.4 billion to $4.8 billion.

The company's performance is being fueled by a global AI infrastructure boom. As AI adoption increases, so does the need for high-capacity memory storage solutions. . Sandisk is benefiting from a supply and demand imbalance in the tech sector, allowing it to raise prices and maintain healthy margins. This dynamic is expected to continue for the foreseeable future, especially as Sandisk has locked in long-term supply agreements with key partners, such as Kioxia Corp, ensuring stable chip supplies through 2034.

Did Sandisk Stock Outperform Expectations in Q2 2026?

Yes, Sandisk delivered far above expectations in Q2 2026. The company reported revenue of $3.03 billion, surpassing the $2.69 billion forecast. Its datacenter business, which includes sales to AI infrastructure builders, saw a 64% sequential increase in revenue. This growth was driven by strong enterprise SSD adoption and strategic pricing power in the memory chip market.

The company also reported non-GAAP diluted earnings per share of $5.15, far above the $3.62 per share that analysts had predicted. Sandisk's strong performance is attributed to a combination of factors, including AI-driven demand, effective capital allocation, and the extension of key supply agreements that secure long-term growth.

Why Is Sandisk Stock Rising Sharply in 2026?

Sandisk stock is rising sharply in 2026 due to a combination of robust earnings, strategic shareholder returns, and strong market fundamentals. In Q2 2026, the company increased share repurchases by nearly 16 times compared to the previous quarter, spending $615 million to repurchase 3.8 million shares. This move shows Sandisk’s confidence in its long-term value and commitment to shareholder returns.

In addition to buybacks, Sandisk paid out $48 million in dividends in Q2 2026. These actions, combined with a strong balance sheet and growing demand for memory chips, have attracted attention from analysts and investors. Some brokerages have raised price targets for Sandisk, with some projecting shares reaching as high as $1,000.

The company is also benefiting from broader trends in the semiconductor industry, where memory chips are experiencing a shortage. This has enabled Sandisk to maintain high gross margins and pricing power, both of which are expected to support future profitability. Analysts from Morgan Stanley and Morningstar believe this favorable environment could last for several years, especially if AI adoption continues at its current pace.

What Are the Risks for Sandisk Investors?

Despite the company’s strong performance, there are several risks to consider. First, the memory chip shortage that has been so beneficial to Sandisk may eventually ease as new production capacity comes online. This could reduce pricing power and compress margins.

Second, while Sandisk has secured long-term supply agreements, the industry is still highly competitive. Rivals like SK Hynix Inc. are also investing heavily in memory chip production and could challenge Sandisk’s market position.

Finally, macroeconomic conditions could impact demand for AI infrastructure. If global economic growth slows, businesses may reduce their investments in AI projects, which could, in turn, reduce demand for memory chips.

Sandisk is riding a wave of momentum driven by AI demand and memory chip shortages. Its Q2 2026 results were impressive, and its Q3 forecast suggests that this trend is likely to continue for the foreseeable future. Investors are taking notice, and the stock is surging as a result. However, while the outlook is strong, it is important to monitor the risks, including potential oversupply in the memory chip market and broader economic headwinds. For now, Sandisk is well-positioned to benefit from the AI boom—and its shares are reflecting that.