The AI Stock That Gets Stronger Every Time the Market Sells Off
Key Points
Sandisk produces memory chips that are critical for the AI boom, making it a direct beneficiary of big tech's spending spree.
Sandisk posted high sequential revenue, and its guidance suggested more of the same in future quarters.
Sandisk has been growing faster than competitors like Micron and Western Digital, which can lead to more market share in the future.
- 10 stocks we like better than Sandisk ›
Not every stock stays down for long during market corrections. Sandisk (NASDAQ: SNDK) seems unstoppable at current levels. It's up by 400% year to date and has surged by nearly 3,900% over the past year. The best part is that this growth is fueled by transformative fundamentals.
Sandisk acts as a key bottleneck in the AI boom
Many stocks that have trounced the stock market over the past year have had some connection to artificial intelligence (AI), and Sandisk is no exception to the rule. Its NAND flash technology acts as the foundation for many memory chips, including those it produces. Those memory chips go inside AI chips and enable them to function optimally.
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You can't create AI chips without memory chips. More investors have noticed, prompting the sudden surge in Sandisk shares, but the company's financial results support the recent enthusiasm.
Sandisk generated $5.95 billion in revenue for the third quarter of fiscal year 2026. That's a big deal because it represents 97% sequential growth and is a 251% year-over-year improvement. Sandisk has delivered multiple quarters of substantial sequential growth that is reminiscent of Nvidia's high sequential growth early in the AI boom.
Sandisk anticipates $8 billion in Q4 revenue at the midpoint, which indicates high sequential growth is here to stay. It's the exact news Sandisk needed to deliver to extend its parabolic rally.
Image source: Getty Images.
AI is still in the early innings
Even though AI has been at the center of investors' attention for multiple years, it is still early. That sounds hard to believe, but the numbers back it up. Nvidia, the ringleader of the AI boom, reported 20% sequential revenue growth in Q4 of its fiscal year 2026, ended Jan. 25, and boosted full-year sales by 65%. Q1 guidance also suggests a double-digit sequential growth rate at the midpoint.
Companies with trillion-dollar market caps are usually more mature than smaller companies that haven't tapped into much market share and are starting to expand. However, Nvidia's growth shows that AI chip demand is still surging, and that has a direct impact on the demand for Sandisk's memory chips.
It's not just Nvidia. Fellow AI chipmaker Broadcom delivered 29% year-over-year revenue growth in the first quarter of its fiscal year 2026, which ended on Feb. 1. The continued demand for AI chips comes as hyperscalers turn their AI investments into profits. Alphabet may have been the biggest winner in this regard, with 63% year-over-year growth in Google Cloud sales steering the company to enticing Q1 results.
This backdrop is critical when assessing Sandisk stock. Big tech is still ramping up its AI spending. That's translating into more AI chip sales, and every AI chip needs multiple memory chips to operate. Sandisk has been producing higher revenue growth than companies like Micron Technology, suggesting that it is gaining market share at a faster rate.
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Marc Guberti has positions in Broadcom. The Motley Fool has positions in and recommends Alphabet, Broadcom, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
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