dpFew investors expected 2026 to start as it did for Sandisk (NASDAQ: SNDK). The stock has risen about 635% year to date as of the time of writing, although it’s down sharply from its high of a 884% gain thanks to the recent AI-related selloff. However, many investors are wondering whether the stock has gotten too hot and needs to cool off further, or if this is the perfect time to buy the stock on sale.
Let’s take a look at what caused this run in the first place, as Sandisk’s situation is unusual compared to most stocks that go parabolic.
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A massive market trend is forcing Sandisk’s stock higher
Sandisk makes NAND memory, which is used to store data in all types of computing devices. However, recently, there has been a massive spike in NAND usage in solid-state drives (SSDs). SSDs are used in data centers for long-term data storage. Given that artificial intelligence software needs to store nearly unprecedented amounts of data for training, and then have quick access to prior chat results and a vast array of other information to function properly in the inference phase, data center demand for SSDs has skyrocketed.
The memory industry wasn’t ready for this spike in demand, which now far exceeds supply, so prices have skyrocketed. Because Sandisk is suddenly able to charge far more for its products, its revenue and earnings are soaring. Prior to the demand spike, Sandisk was a boring cyclical stock, and the market had limited expectations for it, so its valuation was extremely low — just 0.6 times forward earnings at this time last year.
However, as its growth accelerated and the trend proved longer-lasting, the stock’s valuation skyrocketed, reaching more than 35 times forward earnings. Now, it trades at 9.3 times forward earnings. (A large portion of that recent plummet was the result of Sandisk’s fiscal 2027 beginning on July 1; the valuation now reflects the higher earnings projections for its new fiscal year.)
The bigger question now is, how long will this elevated demand for memory last? According to industry peer Micron (NASDAQ: MU), companies expect tight market conditions to persist beyond calendar 2027, which is great news for Sandisk shareholders.
With its price tag reverting to a relatively cheap level and another year or more of strong growth likely ahead due to supply constraints, Sandisk stock looks like one that could keep rising, and now could be a great time to buy it on sale. While that may seem counterintuitive, those are the market conditions that Sandisk is operating in. If data center build-outs continue to ramp up, this imbalance between memory supply and demand could last for years.
