This Artificial Intelligence (AI) Stock Is Up 4,800% in the Past Year. Wall Street Says This Will Happen Next.

Sandisk (NASDAQ: SNDK) has reinvented itself since being spun off from Western Digital in early 2025. The company, once a sleepy consumer brand focused on portable storage, has reoriented around enterprise storage solutions for artificial intelligence.

That evolution has made Sandisk one of the hottest trades on Wall Street. The stock added more than 4,800% in the past year as investors diversified beyond traditional AI hardware companies like Nvidia and Broadcom, pouring capital into the memory chip industry.

Here's what investors should know about this AI infrastructure stock.

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Wall Street's median target price implies 22% downside in Sandisk stock

A few Wall Street analysts think Sandisk stock is headed higher during the next year. Mehdi Hosseini at Susquehanna recently raised his target price to $3,250 per share. That implies 49% upside from the current share price of $2,185. But most analysts think the stock is too expensive.

Among 28 analysts, Sandisk has a median target price of $1,702 per share. That implies 22% downside. And some analysts expect substantial losses. William Kerwin at Morningstar and Srini Pajjuri at RBC Capital have set their targets at $1,000 per share, which implies 54% downside from the current price.

Sandisk is benefiting from an unprecedented memory chip supply shortage

Sandisk designs and manufactures storage products based on NAND flash technology, including embedded storage for consumer electronics, portable memory cards, and solid-state drives (SSD) for enterprise data centers. Sandisk realizes cost savings and supply chain security through its joint venture with Japanese memory chipmaker Kioxia, which helps it compete with larger rivals like Samsung and SK Hynix.

NAND flash memory is used as long-term storage for artificial intelligence training data and models, and demand for AI infrastructure has led to a severe supply shortage. In turn, NAND prices nearly doubled in the first quarter and tripled in the past year as hyperscalers clamored to ensure sufficient storage capacity for AI data centers. Skyrocketing prices have led to very strong financial results for Sandisk.

In the third quarter of fiscal 2026 (ended in April), sales rose 251% to $5.9 billion, an extreme acceleration from 61% growth in the previous quarter, driven by especially strong results in the data center segment. Sandisk also reported non-GAAP (adjusted) earnings of $23.41 per diluted share, up from a loss of $0.30 per diluted share in the same period last year.

Bears argue history will repeat when memory chip demand collapses

Bears argue Sandisk and its competitors are caught in yet another boom-and-bust cycle, which has been a defining quality of the memory chip industry over time. For instance, booming demand during the pandemic was followed by a collapse in 2022. Manufacturers responded by scaling back production, but that left them unprepared for the generative AI era, which has led to another boom.

Supporting that bearish point of view: Despite tremendous sales growth in the most recent quarter, Sandisk merely maintained its market share in NAND. Memory chips, unlike logic chips (CPUs and GPUs), are mostly interchangeable, meaning Sandisk's products are not especially unique. So, the company is not doing well because it has a competitive edge, but rather because a high tide has lifted all ships.

"We don't believe Sandisk holds an economic moat," writes William Kerwin at Morningstar. "We view flash memory chips as commodities that don't command any pricing power, instead being governed by market supply/demand dynamics that determine pricing."

Bulls argue the current memory cycle is different, but Wall Street isn't convinced

Sandisk bulls argue the current memory chip cycle may be different. Hyperscalers are so eager to ensure supply visibility that they are signing multiyear purchase agreements with memory chip manufacturers. That represents a deviation from historical norms, where customer contracts were measured in months rather than years.

Indeed, Sandisk announced five multiyear partnerships last quarter. "These partnerships support durable, structurally higher earnings and a significantly more predictable and less cyclical business for Sandisk," CEO David Goeckeler told analysts. "We believe this marks a fundamental evolution of our business centered on deeper customer alignment, enhanced visibility, and long-term value creation."

Wall Street doubts the bull narrative. After all, it's usually dangerous to tell yourself, "This time will be different." Analysts expect the current memory cycle to collapse in 2029. So, the consensus estimate says Sandisk's adjusted earnings will increase at 25% annually through fiscal 2029. That makes the current valuation of 70 times earnings look expensive. Shareholders should consider trimming their positions.

Trevor Jennewine has positions in Nvidia. The Motley Fool has positions in and recommends Broadcom, Nvidia, and Western Digital. The Motley Fool has a disclosure policy.