Sandisk (SNDK +0.15%) will be joining the Nasdaq-100 on April 20. The stock, which was separated from Western Digital in early 2025, has surged over 2,700% in the last year due to heightened demand for its data center storage solutions.
Overall, analysts on Wall Street consider the stock to be overvalued. Among the 25 analysts monitoring the firm, Sandisk has a median target price of $843 per share, indicating an 8% decline from its current price of $921.
Despite this, some analysts see potential for further growth. In April, Amit Daryanani from Evercore presented a “bull case,” suggesting the stock could reach $2,600 per share, signifying a 182% upside from its current price.
Post-Nasdaq-100 Performance
The Nasdaq-100 tracks the largest 100 non-financial companies on the Nasdaq Stock Exchange. It focuses on growth sectors, particularly the information technology sector.
The Nasdaq-100 is adjusted quarterly, which favors strong-performing stocks, and undergoes annual reconstitution each December to remove underperformers. If a company becomes ineligible during the year, it can be replaced. In this instance, Atlassian could not maintain a required minimum weight for two consecutive months, leading to Sandisk’s selection as a replacement.
In the past decade, 87 stocks added to the Nasdaq-100 generated an average return of 18% over the following year. This pattern tends to occur because funds tracking the Nasdaq-100 must purchase shares. However, exceptions exist; companies like Datadog and Enphase have witnessed declines exceeding 50% within the year post-inclusion. Sandisk’s future performance hinges primarily on financial results and market sentiment.
Sandisk’s Rapid Growth Amid Supply Shortages
Sandisk specializes in data storage technologies using NAND flash memory, including enterprise solid-state drives (SSDs). Although cheaper hard disk drives exist, SSDs offer greater speed, efficiency, and resilience, making them ideal for storing data needed for training artificial intelligence models as well as the models themselves.
Though not the leading supplier of NAND flash memory, Sandisk ranks fourth, sharing this position with Micron Technology. The company gained 2 percentage points of market share last year, while the industry leader, Samsung, lost share and Micron’s remained stagnant, according to Counterpoint Research.
AI data centers demand significantly more NAND flash storage than traditional counterparts, leading to increasing prices due to supply shortages. Amit Daryanani at Evercore predicts this shortage may last until 2028 or longer, but suppliers are striving to enhance production capabilities.
As a result, Sandisk is experiencing remarkable growth, with sales increasing by 61% year-over-year to $3 billion and non-GAAP earnings soaring by 404% to $6.20 per diluted share. However, the cyclical nature of the memory chip industry suggests that this supply shortage will eventually transition to a surplus, likely causing NAND prices to drop substantially.
Analysts predict Sandisk’s earnings to grow by 73% annually through fiscal 2029, making its current valuation of 125 times earnings appear reasonable. However, once the memory chip cycle peaks, the market will likely assign Sandisk a lower multiple. The uncertainty surrounding this also positions Sandisk as a risky investment, given its incredible 2,700% rise over the past year, making it potentially wise for investors to remain cautious for the time being.
