Sandisk's stock gets 'one of the most delayed upgrades in history' after blowout earnings

By Britney Nguyen

Analysts say Sandisk's products may be 'sold out for years' due to a widening gulf between supply and demand

Sandisk shares were soaring Friday morning.

Missed out on Sandisk's 1,400% stock rally through Thursday's close? The company's blockbuster earnings suggest to analysts that there's more room for shares to run higher.

Sandisk (SNDK) is benefiting from booming storage demand even more than Wall Street was expecting. The company's quarterly revenue guidance beat expectations by almost 60% at the midpoint and its profit outlook surpassed estimates by 150%.

That strength in storage demand led Raymond James analyst Melissa Fairbanks to issue what she called "arguably one of the most delayed upgrades in history," as she moved to an outperform rating on Sandisk's stock.

Fairbanks noted more opportunities for upside, "not surprisingly driven by the demand and pricing implications" of the unprecedented AI data-center build-out.

Her new $725 price target implies 34% upside from Thursday's $539.30 closing price. Sandisk's stock was up 13% in midday trading Friday, such that it has now surged almost 1,600% since the company started trading independently last February in the wake of its split from Western Digital (WDC).

See more: Sandisk's eye-popping earnings forecast helps justify massive stock surge

The Raymond James team noted strong pricing power for Sandisk going forward, as demand could vastly outstrip supply "to the point of [Sandisk] potentially being sold out for years," they said. New supply will likely be limited in the near term, they added.

While suppliers of dynamic random-access memory like Micron Technology (MU) have received a lot of love lately, Fairbanks said the demand environment for NAND memory looks sustainable too, and Sandisk stands to be "a key beneficiary" of the shift of storage supply to data centers and away from consumer devices.

Jefferies analyst Blayne Curtis also sees a widening gap between NAND supply and demand.

"This NAND cycle has been nothing short of shocking," Curtis said in a Thursday note. While a downcycle is expected eventually, Curtis said he sees "no clear end in sight" and that the current supply-demand dynamic will likely fall "even more out of balance."

Sandisk's earnings report was "the first real look into the magnitude of structural imbalance" of supply and demand in the NAND market since prices started going higher in the fall, he said.

He predicted bit growth, or an increase in digital storage capacity in the market, to be in the mid-teens range as hyperscalers lock in long-term agreements at least through 2028.

That the increasing demand for storage is due to inference, or the process of running AI models that Curtis said contributes to hyperscaler revenue, is another "layer of sustainability to the story."

Don't miss: Here's how Sandisk's stock can follow its 1,000% surge with even more gains

Mizuho trading-desk analyst Jordan Klein noted that while Sandisk has been popular with retail traders, it also seems to be attracting attention from "real active managers who see the fundamentals accelerating and also need to chase to keep up with sector or benchmark performance."

-Britney Nguyen

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

01-30-26 1243ET