AI reasoning ignites the NAND super cycle! After soaring 629% this year, SanDisk (SNDK.US) is still projected by JP Morgan to rise to $2250.

JPMorgan analyst Harlan Sur recently resumed coverage of SanDisk (SNDK.US) with an "Overweight" rating and a target price of $2,250, which offers nearly 26% upside from the stock's closing price of $1,786.85 on Monday. Data shows that Sur ranks 17th among 12,474 Wall Street analysts tracked by TipRanks, with a success rate of 72% and a five-star rating. When an analyst with such an impressive track record assigns a target price of $2,250 to a stock, it undoubtedly merits investors' attention. According to data, SanDisk's stock price has increased by 628.74% year-to-date, making it the best-performing component of the S&P 500, more than doubling the growth of Dell Technologies, Inc. Class C (DELL.US), which ranks second. SanDisk's stock has surged by 3,415.66% over the past year and by 4,580.86% over the past three years. Sur's resumption of coverage came after SanDisk's Investor Day held on August 13, reflecting three specific themes. First, it further confirms SanDisk's market position as one of the top five NAND flash suppliers globally, as the NAND market is undergoing a structural demand expansion driven by AI inference technology. According to information disclosed during SanDisk's Investor Day, the potential Total Addressable Market (TAM) for enterprise data center flash is expected to grow to 1.2 zettabytes by 2030, primarily driven by the increasing demand for AI inference workloads and KV cache storage. Second, SanDisks New Business Model (NBM) framework is reducing the cyclicality of its business. Currently, NBM agreements cover eight major customers and include commitments for purchase volumes along with minimum financial guarantees. These agreements account for about 50% of SanDisk's bit shipments for fiscal year 2027 and approximately two-thirds of the bit shipments for fiscal year 2028. For a company historically characterized by highly cyclical revenue, locking in two-thirds of future output through multi-year purchase commitment agreements can fundamentally change its earnings quality. Third, SanDisk's technology roadmap includes the unveiling of BiCS9 and BiCS10 QLC nodes at the Investor Day. Compared to BiCS8, BiCS10 offers a 60% improvement in bit density. High Bandwidth Flash technology tailored for AI inference applications is gaining growing support throughout the ecosystem. The company is not just capitalizing on the current NAND price environment but is also building next-generation storage density advantages, further expanding its competitive moat. The target price of $2,250 is supported by Q4 performance and long-term financial framework. Sur's target price of $2,250 is not without foundation. SanDisk's fourth-quarter results announced on August 5 provided the financial basis for every figure in JPMorgan's analysis. The financial report revealed that SanDisk's fourth-quarter revenue reached $8.97 billion, a 51% quarter-over-quarter increase and a 372% year-over-year increase. The gross margin hit 84.6%, up 6.2 percentage points quarter-over-quarter. GAAP operating profit was $7.04 billion. GAAP net profit stood at $6.9 billion, with diluted earnings per share of $43.97. Total revenue for fiscal year 2026 reached $20.25 billion, representing a 175% year-over-year increase; GAAP diluted earnings per share were $73.76. Data center business became a growth engine. SanDisk CEO David Goeckler stated, "We ended fiscal year 2026 with a leading technology product portfolio, establishing data centers as a key growth pillar, and further deepening our partnerships with customers." SanDisk's fourth-quarter data center business revenue reached $2.98 billion, a 103% increase from the third quarter. Total revenue for the data center business in fiscal year 2026 was $5.15 billion, up 437% from the $0.96 billion reported for fiscal year 2025. In the quarter-over-quarter revenue increase, about two-thirds came from price increases, while one-third came from increased sales. This ratio accurately reflects the current supply-demand environment: customer demand for products is so strong that they are willing to accept higher prices without significantly cutting back on purchases. For the first quarter of fiscal year 2027, SanDisk expects revenue to be between $10.3 billion and $10.8 billion, with non-GAAP gross margins anticipated to be between 83.0% and 85.0%, and non-GAAP diluted earnings per share expected to be between $44.00 and $46.00. If this guidance comes to fruition, the revenue generated in just one quarter will exceed SanDisk's total revenue for the entire fiscal year 2025. Furthermore, the long-term financial framework presented by SanDisk during the Investor Day is another reason Sur feels confident in giving a target price of $2,250, despite the stock price already experiencing significant upward movement. According to information disclosed during the Investor Day, SanDisk expects revenue to grow at a mid-to-high single-digit percentage rate during fiscal years 2028 to 2030, with adjusted gross margins around 80%, adjusted operating profit margins around 75%, and adjusted free cash flow profit margins around 50%. The company promises to return 100% of excess cash to shareholders while also having $15.5 billion remaining in stock repurchase authorization, creating a strong compounding mechanism for patient shareholders.