Sandisk (SNDK) shares rose more than 5 percent on Thursday after two Wall Street analysts raised their price targets, predicting the stock’s massive run can continue as demand for memory chips remains strong.
"We think the market is significantly undervaluing earnings power and sustainability of this cycle,” Bernstein analyst Mark Newman said. He rates Sandisk as Outperform.
The stock was up 5.2% on Thursday to $821.68. The new analyst targets imply significant further gains from Wednesday's closing price of $780.90.
The upgrades come as Wall Street buys up shares of “picks and shovels,” or companies expected to benefit from high demand for the hardware needed to power artificial intelligence. Memory is a critical component for AI, and prices for some memory types have nearly doubled in the first quarter of 2024.
Sandisk stock has soared 2,567% in the past 12 months, far outpacing the S&P 500’s 29% gain. Peer company Micron Technology (MU) has also seen its stock climb 473% in the same period.
Concerns over new memory compression technology from Alphabet's (GOOGL) Google, called TurboQuant, caused a brief dip in memory stocks last month. However, analysts like Newman believe those fears were “overdone,” citing the Jevons paradox, which suggests that efficiency gains often lead to increased overall demand.
Cantor Fitzgerald’s C.J. Muse echoed the bullish sentiment, stating that the supply and demand imbalance for memory is likely to extend into mid-2028 at the earliest.
The continued bullish analyst ratings suggest that the market believes the AI-driven demand for memory will be a long-term tailwind for the sector. Investors will be watching memory pricing and demand trends closely in the coming quarters.
This article is for informational purposes only and does not constitute investment advice.
