Sandisk Remains a Hot Buy. Can the Stock's Momentum Continue?

Sandisk (NASDAQ: SNDK) was 1 of the market's hottest stocks implicit the past year, and its unthinkable tally became adjacent much awesome aft the banal surged pursuing its fourth-quarter net report. The semiconductor banal is already up much than 166% successful 2026 alone, arsenic of this writing.

Sandisk is 1 of the world's starring makers of NAND (flash) memory. NAND manufacturers dramatically reduced accumulation a fewer years agone aft a terms crash, arsenic gross margins turned antagonistic owed to oversupply. However, request started to skyrocket arsenic artificial quality (AI) information centers necessitate huge, high-performance solid-state drives (SSDs) utilizing flash representation to clasp grooming data.

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Meanwhile, representation makers person been dilatory to resume production, with galore focusing much connected high-margin, high-bandwidth representation (HMB). HMB is simply a specialized signifier of DRAM (dynamic random entree memory) that is indispensable for helping graphics processing units (GPUs) and different AI chips execute astatine their best. HBM besides requires considerably much wafer space, which is drafting resources distant from different types of memory. This is starring to a immense supercycle successful the representation marketplace wherever prices are skyrocketing.

These dynamics showed up successful Sandisk's fiscal Q2 results, arsenic gross surged 61% twelvemonth implicit twelvemonth to $3 billion. Data halfway gross soared 76% to $440 million, driven by AI information halfway enlargement and accrued NAND usage per deployment. Its Edge segment, which includes smartphones and PCs, saw gross ascent 63% to $1.7 billion, portion the user segment, which consists of things similar flash drives, saw gross leap 52% to $907 million.

The gross maturation was driven by higher NAND prices, which besides greatly boosted the company's gross margins. For the quarter, gross margins climbed from 32.3% past twelvemonth to 50.9%. This helped pb to a 386% surge successful adjusted operating income to $1.1 cardinal and a 404% summation successful adjusted net per stock (EPS) to $6.20.

Looking ahead, Sandisk guided for fiscal Q3 gross to beryllium betwixt $4.4 cardinal and $4.8 billion, up from $1.7 cardinal a twelvemonth ago. Gross borderline is expected to grow to 64.9% to 66.9%, up from 22.5% a twelvemonth ago. Adjusted EPS, meanwhile, is projected to soar from a nonaccomplishment of $0.30 to a nett of betwixt $12 to $14.

The NAND marketplace tin beryllium cyclical, but close present it's successful 1 of the biggest supercycles we've experienced, and determination are nary signs of it slowing down. Demand is voracious, and portion the institution invests to summation capacity, rivals successful the abstraction are much focused connected HBM, which apt keeps the marketplace choky for the foreseeable future.