This Memory Stock Has Soared From About $40 to More Than $2,300 in a Year. Is It Too Late to Buy?

About a year ago, you could buy a share of Sandisk (NASDAQ: SNDK) for about $40. As of this writing, the stock changes hands above $2,300 -- and it is up more than 20% on Thursday alone. The maker of NAND flash memory, spun off from Western Digital in early 2025, has quietly become one of the best-performing stocks in the S&P 500 this year.

The stock's latest jump came after memory rival Micron Technology reported blowout quarterly results this week, reigniting investor enthusiasm for anything tied to artificial intelligence (AI) and computer memory. So, after a run of more than 50-fold in a year, is it too late to buy Sandisk stock?

Image source: Getty Images.

What's behind the surge

So, what's going on?

The short answer is a shortage. Demand for the high-capacity flash storage that feeds AI data centers has collided with tight supply -- and prices have spiked. Micron captured the scale of it this week, reporting record quarterly revenue of $41.5 billion, with its NAND revenue nearly doubling from the prior quarter to $9.9 billion.

Sandisk is riding the same wave. Sandisk's revenue in its fiscal third quarter of 2026 (the period ended April 3, 2026) jumped 251% year over year to $5.95 billion, and rose 97% from the prior quarter. The company's data center revenue (now its fastest-growing business) surged 233% sequentially to about $1.5 billion. And surging prices lifted its non-GAAP (adjusted) gross margin to 78.4% -- remarkable for a business long defined by thin, boom-and-bust margins.

"NAND flash is emerging as the only economically viable solution to deliver the capacity, performance, and efficiency required to keep models accessible for real-time inference at scale," CEO David Goeckeler said in the company's fiscal third-quarter earnings call.

Just as important for the long term, Sandisk is trying to make the good times last.

It has signed five multi-year supply agreements -- what it calls its new business model -- that lock in committed volumes for customers and committed pricing for Sandisk, backed by more than $11 billion in financial guarantees. Management says the deals already cover more than a third of the company's planned output for fiscal 2027.

"These partnerships support durable, structurally higher earnings and a significantly more predictable and less cyclical business for Sandisk," Goeckeler said.

Is it too late to buy?

Here is where it gets tricky. Sandisk trades at a price-to-earnings ratio of about 78 -- a rich multiple that, on its face, suggests the stock has sprinted well ahead of the business.

But that figure looks backward, taking in several far weaker quarters, while the company is now earning at a dramatically faster clip. Consider that management guided for adjusted earnings of $30 to $33 per share in the fiscal fourth quarter alone -- more than Sandisk earned in the entire preceding year. Annualize the current pace, and the stock trades at a run rate price-to-earnings ratio closer to 18.

The catch is everything that math assumes. Memory has always been a deeply cyclical business, and today's eye-popping margins are the product of a genuine shortage that won't last forever. High prices tend to invite new supply, and when it shows up, pricing -- and profits -- can fall as quickly. Sure, Sandisk's multi-year contracts should soften that blow, but they won't erase it.

So, is it too late for investors to buy into this growth story?

After a climb this steep, the easy money may be gone. Yet the forward valuation isn't unreasonable if the AI-driven shortage holds and the new contracts deliver as promised -- but that's a big "if" for a stock that has already priced in a mountain of good news. I'd treat Sandisk as a high-risk way to play the memory boom: one worth watching, but not chasing after a move like this, unless you have some unique insight into the industry and are very confident that the underlying business can live up to the valuation over the long haul. For anyone who does buy, keeping the position small looks like the prudent move.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Western Digital. The Motley Fool has a disclosure policy.