In a recent piece, I highlighted how Morgan Stanley believes that “exceptional” demand for memory chips will normalize, and that Nvidia ( NVDA ) will end up on the winning side because of it. Still, even in a so-called normal situation, the demand for memory chips will continue to grow. Granted, the pace of growth may be subject to market cycles, going through its motions, but memory is an important and undeniable part of the broader AI picture, maintaining demand.
Financial services giant BNP Paribas thinks so too. In a recent note to clients, the broker said, “Our analysis of CQ1 contract prices for 50+ (Dynamic Random Access Memory) SKUs and 75+ NAND SKUs leads us to estimate overall (Dynamic Random Access Memory average selling prices) could increase 90% Q/Q in CQ1, serving as a Q2/Q2 increase following demand of 6% in CQ1. And given the widening demand imbalance that is creating upward price pressure for NAND, we estimate CQ1 prices to increase 55% Q/Q, followed by a 5% Q/Q increase in CQ2 driven primarily by supply-side dynamics as NAND suppliers continue to stockpile excess product capacity.
Based on its analysis, BNP Paribas remains “overweight” on SanDisk (SNDK) with a price target of $650, which implies a 23% upside potential from current levels.
Founded in 1988, SanDisk was until recently a unique name known only for its memory capabilities in the technology space. However, just as memory stocks went parabolic, SanDisk captured the wider imagination of the investment world. Founded to commercialize flash memory storage technology, SanDisk is now a semiconductor storage company focused on NAND flash memory and solid state storage solutions.
With a market value of $77.8 billion, SNDK stock is up an incredible 921% over the past year.
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Now, the bone of contention is whether or not SanDisk can keep it up. Frankly, although BNP Paribas has made a case for investing in the stock, its view is based on short-term motivations. Has SanDisk got it in itself to be a reliable asset builder for years to come? Let’s find out.
SanDisk has been operating in its current form for less than a year following a spin-off from Western Digital (WDC). However, its results haven’t been good this period, with lower-line estimates in each of the past four quarters. Notably, the latest quarter results were also blockbuster, with both revenue and earnings comfortably beating consensus estimates.
Revenues for Q2 2026 reached $3 billion, up 31% sequentially. Revenues in the Edge segment, the largest and which focuses on the core specialty of flash memory and SSDs, rose 21% to $1.7 billion in the same period. However, the fastest growth was experienced by the datacenter segment, which rose 64% quarter-over-quarter to $440 million.
Earnings, meanwhile, more than doubled in the quarter to $6.20 per share. That was more than what the Street was expecting at $3.62 per share. Now, for Q3 2026, SanDisk expects EPS to be in the range of $12 to $14 per share. This would be a huge improvement over last year when the company reported a loss. Revenues, on the other hand, will be estimated between $4.40 and $4.80 billion, with a midpoint of 170.6% annual growth on a year-over-year (YoY) basis.
Flashing back to Q2 2026, net cash from operating activities for the quarter came in at $1 billion, compared to just $95 million in the previous quarter, as SanDisk ended the quarter with a cash balance of $1.5 billion. Its short-term debt was over $20 million.
In addition, SNDK stock also continues to trade at reasonable levels. While the forward P/E and P/CF of 13.24 and 15.13 are lower than the sector median of 21.20 and 17.65, respectively, the forward P/S of 5.03 is not much higher than the sector median of 3.03.
SanDisk’s spin-off from Western Digital may not have gone well, the most obvious evidence of which is the massive rally in its share price. However, under the hood, it also marked the company’s strategic pivot to a pure-play NAND and SSD player, making it a significant player in the AI infrastructure sector.
Deepening its focus on NAND, SanDisk’s clear message to the market has proven to be good for the company. Enterprise customers, mainly LLM developers, prefer NAND memory for its long-term storage capabilities and non-volatile nature, which means it protects your data even when the power is off. Also, SanDisk’s focused business model, focusing on memory and storage rather than full-scale chip manufacturing, keeps capital costs relatively low and avoids the all-or-nothing risks that pure-play manufacturers often face.
Additionally, the company’s growth trajectory is supported by a steady increase in NAND content per device, a trend accelerated by the shift toward edge AI and decentralized speculation. Chip designers are actively looking for ways to reduce reliance on cheap, power-hungry DRAM, turning to NAND for most storage workloads. The rise of edge AI extends this tailwind even further, as more processing moves from centralized cloud servers to local devices and systems.
Notably, to keep pace with demand, SanDisk has deepened its long-standing collaboration with Kioxia (KXIAY). The recently extended joint venture includes a commitment by SanDisk to pay Kioxia $1.17 billion for additional manufacturing services, spread over annual installments from 2026 to 2029.
Looking to 2026, SanDisk’s strongest competitive advantage appears to be in the high-capacity segment, particularly for AI data centers. While competitors such as Micron ( MU ) and SK Hynix have focused on high-bandwidth memory (HBM), SanDisk has established a clear lead in high-density enterprise SSDs (eSSDs). This newly introduced 256TB UltraQLC NVMe SSD, built on BiCS8 QLC NAND, nearly doubles the capacity of Micron’s 128TB offering. BiCS8 technology employs a CMOS Bonded to Array (CBA) architecture that enables industry-leading 4.8 Gb/s I/O speeds by early 2026, with nearly 30% lower power consumption than Samsung’s traditional monolithic designs. These performance characteristics position Sandisk ideally in the high-margin, performance-critical segments of the AI storage market.
Taking all this into account, analysts rated SNDK stock as a “moderate buy” consensus, with an average target price of $700.94. This indicates an upside potential of around 32% from current levels. Of the 21 analysts covering the stock, 14 have a “strong-buy” rating, one has a “neutral-buy” rating, and six have a “hold” rating.
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As of the date of publication, Pathikrit Bose did not have any positions (either directly or indirectly) in any of the securities mentioned in this article. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com
