Why Sandisk Stock Rallied Today
Key Points
Sandisk will be added to the S&P 100 on Sept. 21.
The memory chipmaker continues to deliver blistering growth.
Sandisk stock is attractively priced.
- 10 stocks we like better than Sandisk ›
Shares of Sandisk (NASDAQ: SNDK) charged sharply higher on Friday, jumping as much as 7.8%. As of 12:34 p.m. ET, the stock was still up 7.5%.
The semiconductor specialist rallied ahead of its inclusion in a prestigious index.
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Count me in
The S&P 500 is the most comprehensive benchmark of the U.S. stock market, comprising the roughly 500 largest companies in the country. The index is widely considered the most dependable gauge of overall stock market performance in the country. Prospective members must meet certain market cap, liquidity, and profitability requirements to be included.
The most elite among its members are the S&P 100, a subset that includes the largest and most well-established companies in the index.
Earlier this month, S&P Dow Jones Indices announced that Sandisk would be added to the S&P 100, replacing longtime member Colgate-Palmolive, before the start of trading on Monday, Sept. 21.
So, what does this mean for Sandisk?
Over the short term, Sandisk stock will likely get a boost as its membership in the S&P 100 will spark a wave of buying by major index and exchange-traded funds that track the index -- which is likely driving today's move higher.
In the longer term, inclusion will likely have no impact beyond the prestige and bragging rights that come with membership. On the other hand, it will increase visibility among certain institutional buyers, who are more likely to buy shares in stable, well-respected companies. Inclusion is the S&P 100 checks one of those boxes.
However, Sandisk's operating and financial performance will be more important over the long run, and that's where the chipmaker shines. For the company's fiscal 2026 fourth quarter (ended July 3), Sandisk generated revenue that soared 372% year over year and 51% sequentially to $8.97 billion. Diluted earnings per share of $43.97 swung from a loss in the prior-year period and jumped 91% quarter-over-quarter.
The unprecedented demand for memory chips used for artificial intelligence (AI) shows no signs of slowing, and at just 24 times earnings and just 8 times forward earnings, Sandisk stock is still attractively priced.
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Danny Vena, CPA has positions in Sandisk. The Motley Fool has positions in and recommends Colgate-Palmolive. The Motley Fool has a disclosure policy.
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