Key Highlights
- Melius Research launched coverage with a buy recommendation and $1,350 price objective on Sandisk
- Cantor Fitzgerald increased its forecast to $1,400 while Morgan Stanley moved to $1,100
- NAND pricing anticipated to climb 70–90% quarter-over-quarter in Q1 2026
- Tight supply dynamics expected to persist in the NAND market until 2027–2028
- Morgan Stanley projects gross profit margins nearing 80% with earnings significantly above Street estimates
Sandisk concluded the previous week at a record high around $990 and continued its upward trajectory. Shares surged more than 7% during Monday’s session, reaching $1,063, following a cascade of positive analyst revisions and elevated price projections.
Melius Research led the charge, launching coverage with a buy designation and establishing a $1,350 price objective. This represents approximately 36% potential appreciation from the stock’s late-week trading levels.
Cantor Fitzgerald and Morgan Stanley joined the upgrade cycle. Cantor pushed its forecast to $1,400, while Morgan Stanley elevated its target to $1,100, with both firms highlighting increasingly robust fundamentals across the memory semiconductor sector.
The central thesis shared by all three investment houses revolves around a common narrative: NAND flash memory pricing is experiencing explosive growth, supply remains severely constrained, and artificial intelligence data center demand shows no signs of weakening.
Sector intelligence suggests NAND average selling prices could climb between 70–90% on a sequential basis during the first quarter of 2026. This magnitude of pricing leverage is uncommon in the semiconductor industry, and Wall Street believes it’s catalyzing a substantial earnings acceleration for Sandisk.
Morgan Stanley currently projects gross profit margins reaching approximately 80% and anticipates 2026 and 2027 revenue figures substantially exceeding existing Street consensus. The bank also predicts Sandisk will report another quarterly earnings surprise in its next financial disclosure.
Melius positioned the bullish investment thesis around a fundamental transformation in demand patterns. The research firm contends that high-bandwidth memory, which operates in tandem with artificial intelligence processors, remains in the nascent phase of an extended expansion cycle that may extend “through the end of the decade.”
The conventional worry surrounding memory semiconductor equities centers on cyclicality. Chip demand historically experiences boom-and-bust patterns, and market participants have been reluctant to assign premium valuation multiples to Sandisk due to this volatility.
Supply Constraint Drivers
While DRAM producers are expanding manufacturing capacity — including through the repurposing of certain NAND production facilities — minimal fresh cleanroom capital investment is being directed specifically toward NAND production. This supply-demand imbalance is projected to maintain market tightness at minimum through 2027–2028.
Hyperscale cloud infrastructure operators, consumer electronics manufacturers, and enterprise technology buyers are all vying for the same limited NAND supply pool. The market has essentially sold out, and current pricing power demonstrates this reality.
One strategic development receiving analyst attention involves the emergence of extended-term supply agreements between memory manufacturers and their customers. Comparable LTA frameworks have already transformed DRAM pricing relationships with Micron and Samsung. Should NAND adopt similar contractual structures, it could introduce enhanced pricing predictability and earnings consistency for Sandisk moving forward.
Attractive Valuation Multiples
Sandisk operated at a loss for three consecutive years before achieving profitability during the current fiscal period. Wall Street consensus projections estimate 2026 earnings around $41.75 per share, expanding to over $107 in 2027. Even longer-term 2030 forecasts maintain earnings above $43 — surpassing what the company may generate this year.
Trading below 25 times forward earnings, the equity appears undervalued relative to where analyst estimates currently stand. Morgan Stanley highlighted that Sandisk trades at a valuation discount compared to Micron when measured on a forward cash flow basis.
Market participants will closely monitor forthcoming quarterly results, potential LTA contract announcements, and capital deployment strategies including share repurchase programs as cash generation accelerates.
