The highest-performing shares within the S&P 500 ($SPX) over the past two years inform an apparent story. Markets have been dominated by AI shares, however the nature of the businesses doing the heavy lifting hasn’t been the identical.
First, it was AI enablers like Nvidia (NVDA), Broadcom (AVGO), and Palantir (PLTR) that drove market returns. By 2025, it was one other step within the worth chain, one dominated by storage and reminiscence gamers, that generated essentially the most returns. In 2025, as an illustration, Sandisk (SNDK) was the top-performing S&P inventory. The shares returned 559% to buyers, carefully adopted by different storage and reminiscence shares like Western Digital (WDC) with 282% returns, Micron (MU) with 239% returns, and Seagate Expertise (STX) with 219% returns.
2026 hasn’t been any completely different up to now. SNDK’s 193% year-to-date (YTD) returns make it the highest performer for Q1 2026. At this fee, the inventory can simply match 2025 returns. However that thought course of might land buyers in bother in the event that they’re not cautious. Sandisk’s outperformance isn’t a brand new commerce thought. It’s the extension of the identical play from final yr. We have no idea when the music stops and merchants transfer to the subsequent set of shares within the AI worth chain. Previous efficiency isn’t a assure of future efficiency. So long as buyers know and respect this danger, taking a calculated guess at this level would possibly nonetheless be value it.
Sandisk is an information storage firm that sells solid-state storage options and flash reminiscence. As soon as it turned clear that compute wasn’t the bottleneck in AI workloads and that progress was restricted by the quantity of information that might be processed, reminiscence firms like Sandisk got here to the forefront. The agency has achieved spectacular ends in delivering what its purchasers have anticipated over the past yr and is prone to proceed doing so beneath the management of CEO David Goeckeler.
SNDK inventory had an ideal run in 2025, and all that appeared to proceed till the start of February, when the inventory was buying and selling precisely the place it trades now. AI has developed at a fast tempo, and it’s only now that we have now began seeing full industries being doubtlessly decimated because of AI applied sciences. The inventory calmed down because of related fears and almost had a heartbreaking crash on the information of Google’s (GOOG) (GOOGL) TurboQuant algorithm.
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Now that the inventory has risen previous the TurboQuant-induced fears, it’s time to consider whether or not it could possibly proceed its run or face doable additional headwinds. We all know that Sandisk isn’t solely being valued on its future earnings potential or money flows. The corporate is the beneficiary of a provide crunch, and whether or not that offer constraint continues or not is what buyers ought to deal with, moderately than the inventory’s valuation ratios.
Traditionally, reminiscence shortages have been cyclical. This scarcity is completely different. First, the scarcity is so dangerous that firms have stopped servicing low-margin segments like PCs and related client markets and reallocated assets to AI demand. The AI demand itself is so excessive {that a} provide that may solely develop at 15% to 17% YoY is required to develop at a considerably greater fee. Furthermore, this demand isn’t price-sensitive. Hyperscalers are keen to pay any value to get their fingers on reminiscence in order that their AI develops quicker than the remainder of the pack. Main business gamers will want two to 3 years of capex to deliver sufficient capability on-line to service this demand, and so they’re reluctant to do this due to the previous growth and bust cycles.
Briefly, Sandisk is a inventory that may be purchased not as a result of it’s low cost however as a result of it occurs to be the inventory in the fitting place on the proper time. You’re betting on the AI infrastructure investments to proceed, and so long as they do, Sandisk is within the driver’s seat to offer reminiscence and storage options.
On the corporate’s earnings name on Jan. 30, buyers have been trying ahead to feedback on reminiscence provide and demand. Administration identified that the continued provide constraints not solely demand cautious allocation planning but additionally shut alignment with buyer wants.
Bernstein analyst Mark Newman requested in regards to the firm’s long-term agreements, and CEO David Goeckeler replied that the corporate had constantly obtained messages from a number of prospects to prioritize or assure provide. The agency is investing billions of {dollars} in capex, as per Goeckeler, and this could drive sustainable mid-teens to high-teens progress going ahead. Sandisk’s business relationships with prospects are evolving, and multiyear agreements will assist safe pricing certainty and provide, resulting in sustained long-term earnings. The upcoming earnings report on April 30 will present extra insights into the present standing of the business.
Sandisk has obtained numerous analyst curiosity in the previous couple of days. On March 31, Bernstein analyst Mark Newman assigned a goal value of $1000 to Sandisk shares. That is at the moment the very best value goal on Wall Road. Two extra analysts expressed related bullish sentiment earlier than him. On March 27, Citi assigned a value goal of $875, whereas Financial institution of America Securities assigned a value goal of $900 to SNDK.
Twenty analysts at the moment cowl SNDK inventory on Wall Road. Fourteen of them fee the inventory a “Robust Purchase.” It’s value noting that there’s not a single analyst with a “Promote” or “Robust Promote” score. The imply goal value of the shares is $752.24. This means analysts, on common, consider the inventory might go up by 9%. Nonetheless, if Bernstein’s value goal of $1000 have been to materialize, it could end in a 44% acquire for buyers.
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On the date of publication, Jabran Kundi didn’t have (both instantly or not directly) positions in any of the securities talked about on this article. All data and information on this article is solely for informational functions. This text was initially revealed on Barchart.com
