Sandisk(NASDAQ: SNDK) has set the stock market on fire in 2026, rising an incredible 166% as of this writing, thanks to red-hot demand for the company’s flash memory storage solutions used in a variety of applications.
A big reason investors have been buying this semiconductor stock hand over fist of late is that it trades at an incredibly cheap valuation. Importantly, Sandisk’s earnings growth potential and the valuation make it clear that it can sustain its momentum in 2026.
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Let’s take a closer look at the potential upside investors can expect from Sandisk by the end of the year.
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Sandisk makes flash-based data storage solutions for gaming consoles, personal computers (PCs), laptops and notebooks, smartphones, tablets, and other applications. The company experienced remarkable growth across all its business segments.
This explains why its revenue was up by 61% year over year in fiscal 2026’s second quarter (which ended on Jan. 2) to just over $3 billion. More importantly, its earnings increased by just over 5x. The stunning growth in Sandisk’s earnings is the result of a severe supply shortage in the NAND flash industry.
Artificial intelligence (AI) data centers have been consuming a significant chunk of flash storage supply to store massive datasets to support artificial intelligence (AI) workloads. At the same time, the average storage in generative AI-capable smartphones and PCs is rising. As a result, flash memory manufacturers, such as Sandisk, aren’t able to produce enough chips to satisfy end-market demand.
The supply shortage has led to an astronomical increase in flash storage prices. Sandisk pointed out in its January earnings call that its fabrication plants are running at full capacity. However, the demand for memory chips is so strong that hyperscalers are willing to pay a significant premium to secure more storage capacity.
That’s probably the reason why Sandisk will reportedly double the price of its enterprise-focused 3D NAND solid-state drives in the current quarter. Given that the 2026 NAND flash manufacturing capacity is reportedly sold out, there is a strong possibility of prices rising further. So, it is easy to see why the midpoint of Sandisk’s fiscal Q3 earnings guidance of $13 per share would be a vast improvement over the year-ago loss of $0.30 per share.
Analysts expect Sandisk’s earnings to jump to $39.45 in the current fiscal year from $2.99 per share in the previous one. The company is anticipated to sustain impressive momentum in the next fiscal year as well.
Sandisk has already delivered $7.55 per share in earnings in the first half of the current fiscal year. The consensus estimate for fiscal 2026 suggests that it could deliver another $31.90 per share in earnings in the second half of the fiscal year (which will end in June).
Assuming Sandisk registers half of its $73.69 earnings per share target for fiscal 2027 in the first half of the next fiscal year (which will end in December 2026), its calendar 2026 earnings could land at $70.07 per share.
Sandisk is currently trading at just 15 times forward earnings, a significant discount to the tech-laden Nasdaq-100 index’s forward earnings multiple of 24.7. Even if it trades at 20 times earnings at the end of the year due to its accelerating growth, its stock price could jump to $1,401 (based on the $70.07-per-share earnings estimate).
The multiple assumed is lower than the Nasdaq-100 index’s forward price-to-earnings ratio (using the index as a proxy for tech stocks). The price target mentioned points to a 158% jump from current levels, though don’t be surprised if it jumps higher if the market rewards it with a premium valuation.
So, investors looking to buy an AI stock that’s growing at a phenomenal pace and trades at an attractive valuation can still buy Sandisk, as its remarkable rally is here to stay in 2026.
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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
