The Newest Stock in the S&P 500 Has Soared 512% in 2025, and It's a Buy Right Now, According to Wall Street

The S&P 500 (SNPINDEX: ^GSPC) is widely regarded as the most reliable benchmark of the U.S. stock market, made up of the 500 leading publicly traded companies in the country. Given the breadth of the businesses that comprise the index, it is regarded as the best overall measure of stock market performance. To be considered for admittance to the S&P 500, a company must meet the following criteria:

• Must be a U.S.-based company
• Must have a market cap of at least $22.7 billion
• Must be highly liquid
• At least 50% of its outstanding shares must be available for trading
• Must be profitable on generally accepted accounting principles (GAAP) basis in the most recent quarter
• Must be profitable during the preceding four quarters in aggregate

Sandisk (NASDAQ: SNDK) is the latest addition to the S&P 500, scheduled to join the benchmark on Friday, Nov. 28. That makes it one of just 12 companies to make the grade so far this year. Since the company split from Western Digital earlier this year, Sandisk has thrashed the broader market, generating gains of 512%, compared to just 11% for the S&P 500 (as of this writing). The stock price gains have been driven by investor enthusiasm for the company's prospects, strong execution, and a sound strategy for future growth.

Image source: Getty Images.

Yet, despite the flash memory specialist's blistering gains and its relatively short track record, many believe the road ahead is long for Sandisk. Let's review what the company has done to generate excitement and why Wall Street considers the stock a buy.

What a long, strange trip it's been

A little background is in order to understand how Sandisk got to where it is today. After its initial public offering (IPO) in 1995, the company remained a publicly traded entity for nearly two decades before it was scooped up by Western Digital in 2015. The deal was intended to unite two powerhouses in the data storage space, but things didn't go according to plan.

After years of subpar performance, Western Digital came under pressure from activist investors, including Elliot Investment Management, which argued for the separation of the hard disk drive and NAND flash memory businesses to unlock shareholder value. The campaign was ultimately successful, and Western Digital announced in late 2023 that it would split into two companies.

In February, the company completed the planned split, and the flash memory company retained its former name, Sandisk.

Early success in its growth strategy

While we don't yet have a full year of stand-alone financial and operating results, the early signs are encouraging. In its fiscal 2026 first quarter (ended Oct. 3), Sandisk generated revenue of $2.3 billion, up 23% year over year and 21% sequentially. Adjusted earnings per share (EPS) of $1.22 were down 33%, the result of start-up costs and separation expenses.

Data center revenue declined 10% year over year, but that belies the strides Sandisk has made to establish itself as a key player in the space. Segment revenue grew 26% sequentially and the company noted it had "two hyperscalers in qualification, a third hyperscaler and top storage [original equipment manufacturer] planned for [calendar 2026], and engagement with five major hyperscale customers."

Management expects Sandisk's growth streak to continue, forecasting revenue of $2.6 billion and adjusted EPS of $3.20, both at the midpoint of its guidance.

Wall Street is bullish

In the wake of the company's financial report, Wall Street scrambled to rerun its models, and Sandisk found itself on the receiving end of a dozen price target increases and an upgrade.

Yet Wall Street remains bullish. Of the 18 analysts that covered the stock thus far in November, 12 rate it a buy or strong buy, and none recommend selling. Sandisk's average price target of $258 represents potential upside of 17% compared to the stock's closing price on Tuesday.

Cantor Fitzgerald analyst C.J. Muse is among the most bullish, maintaining an outperform (buy) rating and $300 price target on the stock, which suggests additional upside of 36% for investors compared to the stock's closing price on Tuesday. The analyst suggests NAND supply is "tightening," which could result in shortages through the end of next year -- confirming statements by management. Data center operators looking to lock in supply are signing long-term agreements, positioning the data center segment as Sandisk's biggest market.

Sandisk doesn't yet have a year of profitability, so earnings-based valuation metrics are useless. The stock currently trades at roughly 3 times forward sales, which is an attractive price for one of the Top 5 players in the global NAND market well positioned to grow its share.

Given its solid growth strategy, strong execution, and Wall Street's bullish take, I would submit that Sandisk stock is a buy.

Danny Vena, CPA 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.