Buy SNDK for Double-Digit Returns in the Short Term After a Solid 2025

Sandisk Corp. SNDK — a leading flash and advanced memory technology innovator — is set to maintain its astonishing momentum. The company reported strong second-quarter fiscal 2026 earnings results. 

This was attributed to revenue growth of 61% year over year to $3.03 billion, driven by robust datacenter demand from AI infrastructure builders and strengthened pricing across all end markets. Earnings reflected exceptional improvement, with SNDK reporting earnings per share of $6.20, a substantial increase from the year-ago figure of $1.23, and ahead of the Zacks Consensus Estimate by 75.14%.

Strong Datacenter and Edge Growth

SNDK has benefited from the structural shift toward AI computing, which requires significantly more NAND flash storage per deployment compared with traditional workloads. AI training models and inference applications generate massive data volumes that demand high-performance enterprise solid-state drives, while edge devices need greater storage capacity to support on-device AI features. 

This creates a favorable demand environment where SNDK can command premium pricing for its advanced technology products while maintaining disciplined supply allocation. The benefits materialized in the fiscal second-quarter performance, with datacenter revenues surging 76% year over year, driven by adoption across cloud hyperscalers and enterprise customers. 

Edge revenues climbed 63.2% year over year, as AI-enabled personal computers and mobile devices increased storage requirements per unit. Consumer revenues grew 51.7% year over year on premium product innovations and strategic brand partnerships.

Sandisk's BiCS8 quad-level cell storage product continues to advance through qualification with two major hyperscalers and is expected to generate revenues soon. The extended joint venture agreement with Kioxia Corporation through December 2034 positions Sandisk favorably against Western Digital Corp. WDC, Seagate Technology Holdings plc STX and Micron Technology Inc. MU. 

Strong Guidance

Sandisk maintains a positive outlook for the third quarter of fiscal 2026, expecting revenues between $4.4 billion and $4.8 billion, representing another substantial sequential increase at the midpoint. Gross margin is projected to expand further to a range of 65-67%. Earnings per share guidance of $12 to $14 reflects continued pricing strength and improved product mix. This indicates that the structural improvements in the NAND market are sustainable rather than cyclical.

Solid Estimate Revisions

SNDK has an expected revenue and earnings growth rate of 92.1% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for the current year’s earnings has improved 57.2% in the last seven days. 

It has an expected revenue and earnings growth rate of 82.1% and more than 100%, respectively, for next year. The Zacks Consensus Estimate for next year’s earnings has improved 34.4% in the last seven days. 

Impressive Short-Term Price Upside

The short-term average price target of brokerage firms for the stock represents an increase of 10.4% from the last closing price of $597.95. The brokerage target price is currently in the range of $1,000-$235. This indicates a maximum upside of 66.7% and a downside of 61.5%. 

Investment Thesis

Sandisk currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The stock is currently trading at a 21.3% discount to its 52-week high achieved on Feb. 3. Sandisk’s innovative product portfolio and its solid market traction in the fast-growing AI data center market have positioned it as a lucrative buy on the dip and a hold for the long term. 

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This article originally published on Zacks Investment Research (zacks.com).

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