The latest race in the technology sector has centered on developing the proper artificial intelligence (AI) infrastructure needed to handle a new generation of data-intensive applications. This creates a classic “picks and shovels” opportunity for investors who are willing to broaden their views on an industry.
Sure, the winners so far have been the semiconductor and chip makers, but there’s a lot more growth potential in those surrounding the space.
Take the data center buildout across the United States, for example. This trend is fueled by both rising AI workloads and a push to onshore infrastructure, which could significantly benefit companies like Sandisk Corp. (NASDAQ: SNDK) that are quietly becoming critical to this ecosystem.
Sandisk's Overlooked Cloud Business
Most investors still associate Sandisk with physical flash memory devices, but its cloud storage and data center solutions are gaining traction—and fast. In the past year, this segment grew from just 6% to 12% of total revenue. As AI becomes more embedded in business processes, demand for fast, reliable, and scalable storage continues to surge.
What makes this particularly bullish is that Sandisk’s cloud segment delivers the highest margins in the company’s portfolio, which means expanding this area could significantly boost both earnings and cash flow. Wall Street is beginning to price in this potential.
Although Sandisk isn't the only player in this space, consolidation is unlikely. The urgency to complete these projects — combined with current U.S.–China tech restrictions — is driving a surge of parallel development across multiple providers. That backdrop creates even more upside for companies like Sandisk.
While Sandisk isn’t alone in this industry, consolidation is unlikely given the urgency to complete these projects and current U.S.–China tech restrictions are only going to create more tailwinds.
Analyst Upgrades Reflect Confidence in Upside
While the consensus price target remains set at $77.50, with most analysts recommending Sandisk stock as a Buy, three of them have decided to break out of this mold and raise their price targets.
Mark Miller (Benchmark), Asiya Merchant (Citigroup), and Wamsi Mohan (Bank of America) each assigned SNDK stock a $125 per share price target, implying an 11% upside and a new 52-week high. Their upgrades suggest a growing conviction around Sandisk’s evolving role in AI-driven data center infrastructure.
With multiple analysts independently arriving at the same price target, the underlying thesis appears aligned: Sandisk is no longer just a flash memory brand; it’s becoming a core enabler of next-generation cloud architecture.
In fact, some institutions have capitalized on this momentum and new brand awareness to solidify their positions. BlackRock, for example, increased its holdings in Sandisk stock by 16.5% in June 2025, bringing its holding to a high of $760.3 million today. That kind of positioning signals belief in further upside and reinforces confidence in the stock’s near-term trajectory.
Will the Rally Continue, or Has It Run Too Far?
After such a sharp run-up, investors naturally wonder if they’re too late. While some expect a pullback, current fundamentals suggest otherwise. These analyst upgrades and the spotlight on Sandisk’s role in AI data centers could sustain upward momentum.
One thing is certain, and that is that tomorrow’s Sandisk will be a lot different than what it is today, especially considering the latest quarter of financial results. Cloud revenue, although still small, demonstrated 195% net growth on an annual basis, showcasing to investors just how intense this area is becoming for the company.
Not only is this a massive growth engine for Sandisk, but it is also its highest-margin business, meaning that as it takes a larger share of total revenue, this efficiency will ultimately be reflected in the company’s earnings per share (EPS). When this ends up being the result, valuations will eventually have to follow suit.
However, by the time this EPS tailwind becomes apparent, the stock might have already priced in most of this growth. Although at today’s 12.4x price-to-earnings (P/E) valuations, Sandisk is well below its peers in technology and too far to have priced in even a fraction of this future growth potential.
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The article "Is Sandisk Still a Buy After 118% AI-Fueled Surge?" first appeared on MarketBeat.