AI Boom Fuels SanDisk's Stellar Forecast, Sending Shares Soaring

By Reuters

January 30 - SanDisk shares skyrocketed on Friday, propelled by a forecast that smashed analyst estimates. The data storage specialist signaled that the artificial intelligence revolution is translating into massive, sustained demand for its products, leading to a wave of bullish upgrades from Wall Street.

The company's stock closed up 14.7% at $616.50, adding to a staggering January rally of roughly 160% that has cemented its position as one of the top performers in the S&P 500 this year.

For the fiscal third quarter, SanDisk projected revenue between $4.4 billion and $4.8 billion, with adjusted earnings expected to land between $12 and $14 per share. The midpoints of these ranges significantly outpaced the consensus estimates of $2.77 billion in revenue and $4.37 per share, according to LSEG data.

"We are witnessing a fundamental shift," said Morgan Stanley analysts in a client note. "While earnings are currently above the long-term trend, our analysis suggests this elevated level could persist for years, contingent on the robustness of the AI growth trajectory."

The optimism stems from a global scramble for high-performance memory and storage, critical components for training and running complex AI models. This shortage has created a seller's market, with AI firms and consumer electronics giants vying for limited supply. Industry analysts, including those at Morningstar, predict these supply constraints could last until at least 2028, setting the stage for a prolonged upcycle.

SanDisk's strong position was further bolstered by news that it extended its pivotal flash memory supply agreement with joint venture partner Kioxia Corp of Japan through 2034, five years beyond the previous expiration date of 2029. This move secures its manufacturing pipeline amid the crunch.

The company is not alone in benefiting from the trend. Rivals like Western Digital, Seagate Technology, and Micron Technology have also posted strong gains recently, though Western Digital's shares dipped 5.5% on Friday despite its own upbeat forecast.

SanDisk's blowout forecast follows a second quarter where it reported sales of $3.03 billion and adjusted profit of $6.2 per share, both topping estimates. In response, at least five brokerages raised their price targets on the stock, with Bernstein setting a Street-high target of $1,000.

Reporting by Shashwat Chauhan in Bengaluru; Editing by Shilpi Majumdar

Market Voices

David Chen, Portfolio Manager at Horizon Capital: "This isn't just a quarterly beat; it's a confirmation of a secular trend. SanDisk's guidance and supply deal extension provide visibility into multi-year growth. They are a core holding for anyone betting on the AI infrastructure build-out."

Rebecca Shaw, Technology Analyst at ClearView Research: "The numbers are undeniably impressive, but valuation is becoming a serious concern. The stock has run up 160% in a month. While the AI demand story is real, much of this explosive growth may already be priced in, leaving little room for error."

Marcus Thorne, Independent Tech Commentator: "It's pure euphoria. These valuations are detached from reality and echo the dot-com bubble. Every company is now an 'AI play,' and the market is throwing money at anything with a vague connection. The moment demand shows even a slight hiccup, this house of cards will tumble."

Anya Petrova, Chief Strategy Officer at DataFlow Inc.: "As a buyer of their components, this news is a double-edged sword. It validates our sector's growth, but extended shortages and rising prices threaten to squeeze margins across the entire AI ecosystem. We're diversifying our supplier base urgently."