Why Sandisk Rallied Today

Shares of Sandisk Corp. (NASDAQ: SNDK) rallied another 11.5% on Wednesday as of 12:14 p.m. ET.

Sandisk was formerly the NAND flash segment of Western Digital, before it was spun out from Western Digital early this year. The stock has subsequently rocketed higher, after a long malaise in NAND flash pricing seems to have given way to a new "supercycle" in NAND flash prices.

Positive commentary over AI demand from other companies and price hikes from sell-side analysts seem to be fueling another rally for Sandisk today, which is now up over 300% on the year.

Sandisk got a massive price hike yesterday

Today's appreciation may be a delayed reaction to a massive analyst price hike for Sandisk yesterday. Yesterday's broader market action was negative, holding many stocks back due to escalating tensions between the U.S. and China over trade, which dragged down most stocks not involved in rare earths.

Yet while trade war news held back gains yesterday, Sandisk did receive a massive price target hike on Tuesday, when analysts at Cantor Fitzgerald actually raised their price targets on a number of artificial intelligence (AI)-related tech stocks. These included AI chip stocks, foundries, semicap equipment, and memory and storage. On memory and storage stocks, the analyst team led by C.J. Muse said, "Demand for DRAM remains robust given significant compute buildouts for generative AI, NAND remains in the early innings of the recovery in both Consumer and Data Center, and the HDD oligopoly continues to act like an oligopoly with disciplined supply growth, helped by AI-driven demand."

As a result of this analysis, Muse and his team raised their price target on Sandisk from $50 to $180. That's an incredible more than tripling of Sandisk's target price, showing an analyst flipping from skeptical to decidedly bullish.

Sandisk makes NAND flash storage, which has been under severe pricing pressure and oversupply really since the end of the pandemic in 2022. In response, the broader industry cut back on NAND flash investment across the board, as most of the industry capital expenditures went to DRAM and high-bandwidth memory (HBM) for AI.

However, not only do the consumer-facing PC and mobile markets appear to be growing again after a long pandemic-era slump, with the phones and PCs bought during that time now aging, but artificial intelligence data center demand is now also boosting prospects for NAND. This is especially true as the AI industry goes from training to inferencing at the edge, where NAND is more likely to be the storage medium of choice versus hard disk drive (HDD) bulk storage.

Optimism over chip demand may have also been boosted today by ASML Holdings, which forecast better-than-expected 2026 guidance on its earnings release this morning.

Accelerating demand is running into years of underinvestment in supply, therefore leading to a boom in flash prices.

Image source: Getty Images.

Memory and storage are the most boom-and-bust part of semis

Semiconductor stocks are known to be cyclical, but memory and storage are the most cyclical parts, due to the commodity-like variability of pricing based on supply and demand. It appears we are now in the early stage of a massive boom, which could last for a while due to the AI buildout.

However, investors should also be aware that the bigger the bust, usually the bigger the boom, and vice versa. That means whenever the next downturn comes, it could be severe as well.

Billy Duberstein and/or his clients have positions in ASML. The Motley Fool has positions in and recommends ASML. The Motley Fool has a disclosure policy.