Is This AI Winner Still a Buy After a 500% Run?

Core Viewpoint - SanDisk Corporation has significantly outperformed major AI stocks like Nvidia and Microsoft, with its shares surging from $36 to $220 since its spinoff from Western Digital, representing over a sixfold increase [2][4]. Company Performance - SanDisk's stock has seen a remarkable increase due to strong demand for NAND flash memory chips, particularly from AI hyperscalers, which has allowed the company to raise prices [6][7]. - For the quarter ending October 3, 2025, SanDisk reported a 23% year-over-year revenue increase and a 21% quarter-over-quarter increase, despite a 33% year-over-year decline in earnings per share (EPS) [8]. - Management expects revenue for the current quarter to be between $2.55 billion and $2.65 billion, with non-GAAP EPS projected between $3 and $3.40, indicating anticipated sequential growth of 12.6% in revenue and 162.3% in earnings [9]. Future Projections - Wall Street analysts estimate SanDisk could report EPS of $12.81 for the fiscal year ending June 2026 and $20.21 for the fiscal year ending June 2027 [10]. - The stock currently trades at a forward price-to-earnings ratio of 17, which is lower than Nvidia's 23, indicating potential for further valuation expansion [11]. Market Dynamics - Demand for memory chips is expected to remain strong, with capacity expansion likely several quarters away from meeting demand, suggesting continued favorable trends for SanDisk [12]. - SanDisk's recent addition to the S&P 500 index may provide additional support for its share price [14].