Sandisk Surges as AI Optimism and Strong Earnings Drive Growth

Sandisk (SNDK) rose 6.9% on Friday as investors sought bargains in AI stocks amid a broader market downturn. The increase was aligned with other storage industry players, such as Micron and Western Digital. This rally was fueled by optimism in the AI sector and reinforced by Nvidia's $2 billion investment in an AI infrastructure company.

The company's second-quarter net income surged 672% to $803 million, driven by strong performance in the storage industry. Revenue rose 61% year-over-year to $3.025 billion. For the third quarter, Sandisk anticipates revenue in the range of $4.4 billion to $4.8 billion, reflecting a potential 159 to 183% growth.

On Monday, Sandisk climbed 6.3% as positive market sentiment emerged following Iran's suggestion that it might end the ongoing war in the Middle East. This development was seen as a positive indicator for global markets.

Why Did This Happen?

According to Citigroup analyst Asiya Merchant, Sandisk's price target was raised to $875 from $750, citing the strong demand for NAND storage driven by AI applications. Micron's recent results showed higher-than-expected revenues and earnings per share, which underscored the strength of the storage market.

The favorable supply and demand environment in the NAND storage market has been a key factor. Merchant emphasized that AI applications are accelerating data center NAND demand, with industry NAND bit growth expected at ~20% in 2026.

What Are Analysts Watching Next?

Despite the strong performance, Micron's shares fell over 4% premarket due to its capital spending plans. The company plans to increase 2026 spending by $5 billion and expects further increases in 2027. This has raised concerns that current earnings may be temporary and that the memory chip market could return to a more commoditized state as new capacity comes online.

Sandisk's BiCS8 technology is unlocking new growth in data center applications, with management anticipating data centers to become the largest NAND market in 2026. The company is preparing to launch a QLC-based enterprise SSD later in the year, which is expected to boost its relevance in data centers.

Sandisk's data center revenue grew 76% year-over-year in its latest quarter, indicating strong adoption of its BiCS8 technology and PCIe Gen5 enterprise SSDs in AI infrastructure. With the BiCS8 QLC Stargate product in qualification, Sandisk is positioned to see continued revenue growth as the data center segment expands.