Shares Rally on AI-Driven Growth
Sandisk’s shares jumped 14.7% on Friday after the data storage company projected third-quarter revenue and profit well above analysts’ expectations. The stock’s January gains of around 160% have made it one of the top performers on the S&P 500.
Third-Quarter Forecast Exceeds Estimates
The company expects fiscal third-quarter revenue between $4.4 billion and $4.8 billion. Adjusted profit is projected at $12 to $14 per share. Both midpoints surpass analyst estimates of $2.77 billion in revenue and $4.37 per share in profit. Morgan Stanley analysts noted that earnings appear likely to stay strong as long as AI demand remains robust.
Industry Peers Also See Gains
Rivals like Western Digital, Seagate Technology, and Micron Technology have also reported solid gains recently. Memory chip makers are emerging as winners in the AI boom. Although Western Digital forecasted higher third-quarter revenue, its shares fell 5.5%. Worldwide memory chip shortages are creating intense competition among AI and consumer electronics firms, supporting a multi-year backlog for manufacturers.
Supply Constraints Could Boost Growth
Morningstar analysts expect supply challenges to continue until at least 2028. This situation could fuel significant growth for Sandisk. In the second quarter, the company reported $3.03 billion in sales and $6.2 per share in adjusted profit, both exceeding expectations.
Long-Term Supply Deal Secured
Sandisk extended its flash chip supply agreement with Japan’s Kioxia Corp through 2034, up from the previous 2029 expiration. As a result, investors are optimistic about the company’s long-term prospects. At least five brokerages raised price targets, with Bernstein calling the stock as high as $1,000 per share.
