Why is SanDisk stock rising today?

Sandisk SNDK shares rose about 4% on Wednesday, outperforming a weaker broader market as Wall Street analysts continued to grow more optimistic about the company's position in the rapidly expanding NAND memory market.

However, the stock shed some of the gains and was trading 1.54% higher at the time of writing.

The latest gains follow a series of bullish analyst updates that highlight strong demand for memory products used in artificial intelligence and data-center applications.

Investors have increasingly focused on memory manufacturers as AI infrastructure spending continues to accelerate, creating supply constraints across key segments of the semiconductor industry.

Bank of America raises target amid favorable market conditions

The latest boost came from Bank of America, which on Monday raised its price target on Sandisk to $2,100 from $1,500 while maintaining a Buy rating on the stock.

The firm cited favorable supply-and-demand dynamics in the NAND memory market and pointed to contractual arrangements that could provide greater earnings visibility.

According to Bank of America, Sandisk has already committed more than one-third of its expected fiscal 2027 revenue through newly structured customer agreements.

These arrangements include minimum revenue commitments, financial guarantees, and customer prepayments.

The bank believes the agreements could help stabilize earnings while allowing the company to benefit from rising memory prices.

Analysts also expect NAND pricing strength to continue through at least the first half of 2027.

Bank of America noted that limited new industry supply is expected to come online before 2028 or 2029, potentially supporting margins and revenue growth over the next several years.

The firm added that the contractual commitments could help protect results if market demand weakens.

Analysts see continued upside from AI-driven demand

Other Wall Street firms have also become more optimistic about Sandisk's prospects.

Cantor Fitzgerald recently increased its price target to $2,900 from $1,800.

Analyst CJ Muse said the AI memory opportunity remains far from over and believes the sector is still in the middle stages of its expansion.

Muse believes the AI memory trade has only reached “mid-innings” and expects sustainable tailwinds for memory companies as the industry enters “a new AI-driven memory paradigm.”

Mizuho analyst Vijay Rakesh also raised his price target, increasing it to $2,200 while maintaining an Outperform rating.

“We continue to see AI as the driving force behind the supply-demand imbalance in the memory market, as we note increasing demand in 2027/28E could add further pressure to the market,” Rakesh said in a note cited by Seeking Alpha.

The positive outlook reflects growing expectations that AI applications will continue driving demand for high-performance memory products required to train and operate advanced AI models.

Morningstar warns valuation may have outrun fundamentals

Not all analysts are convinced the rally can continue indefinitely.

Morningstar Chief US Market Strategist Dave Sekera acknowledged the extraordinary demand environment but cautioned that memory remains a cyclical and commodity-oriented business.

However, Sekera warned that supply could eventually catch up with demand.

“Again, in my mind, I still think it’s more of a commodity-oriented product. At some point, supply is going to catch up, and when that happens, look out below.”

Morningstar currently assigns Sandisk a fair value estimate of $1,000 per share, significantly below current analyst targets.

Sekera noted that Morningstar rates the company as having “no economic moat” and described the stock as trading at a substantial premium to its fair value estimate.