Sandisk Corporation (NASDAQ: SNDK) reported strong financial results for calendar Q2 2025, driven by surging demand for enterprise solid-state drives (SSDs) and artificial intelligence (AI) workloads. This performance has led to significant analyst rating upgrades and an optimistic outlook for the company's stock.

Sandisk Corporation (NASDAQ: SNDK) concluded a strong second calendar quarter of 2025, with its stock advancing significantly amidst robust demand for memory chips, particularly in the enterprise solid-state drive (SSD) and artificial intelligence (AI) sectors. The positive financial performance and strategic market positioning have prompted several analysts to upgrade their ratings and price targets for the semiconductor company.

Fiscal Performance Driven by Enterprise and AI

For the fourth fiscal quarter of 2025, which corresponds to the calendar second quarter, Sandisk reported impressive financial results. The company achieved revenue of $1,901 million, marking a 12% increase from the preceding quarter and an 8% rise year-over-year. Non-GAAP earnings per share (EPS) for the quarter stood at $0.29, surpassing analyst expectations. This strong showing follows Sandisk's spin-off from Western Digital Corporation (WDC) on February 21, 2025, allowing the company to focus acutely on its flash memory business.

While Sandisk reported Q3 2025 revenue of $1.70 billion, a sequential decrease of 10%, the market's focus remains on the momentum generated in Q2 2025, fueled by an undersupplied flash memory and NAND market. The company also announced a price increase exceeding 10% across all products for channel and consumer customers, signaling strong pricing power in the current market environment.

Market Reaction and Analyst Upgrades

Investors responded positively to Sandisk's performance and strategic moves, driving the stock to surge over 90% year-to-date. The company's shares recently traded around $73.92 after reaching $68.88 earlier in the period. This upward trajectory was supported by a series of optimistic analyst revisions.

Benchmark notably raised its price target on Sandisk to $85.00 from $70.00, maintaining a 'Buy' rating. Morgan Stanley further elevated its outlook, increasing its price target to $96.00 from $70.00, while upholding an 'Overweight' rating and designating Sandisk as a 'Top Pick'. These upgrades underscore a bullish sentiment regarding the NAND memory market, anticipating higher pricing due to substantial orders from hyperscalers for NAND enterprise SSDs.

Broader Context: Enterprise SSD Market Dynamics

The broader enterprise SSD market experienced significant growth in Q2 2025, with the top five vendors collectively generating over $5.1 billion in revenue, representing a 12.7% quarter-over-quarter increase. This expansion was largely driven by the ramp-up of NVIDIA's Blackwell AI platforms and the ongoing expansion of North American cloud service providers.

Despite Sandisk's strong overall performance, which is underpinned by growing demand for enterprise SSDs and AI, the company's specific enterprise SSD revenue of $210 million in Q2 2025 suggests ongoing efforts to deepen its penetration in this competitive segment. Other key players like Samsung and SK Group maintained leading market shares, with SK Group showing the fastest growth at 47.1% quarter-over-quarter. Sandisk is strategically focusing on next-generation research and development through alliances like its High Bandwidth Flash (HBF) partnership with SK hynix to enhance its position in high-capacity, low-latency SSDs optimized for AI workloads.

Expert Commentary on Future Outlook

Analysts emphasize Sandisk's strong positioning to capitalize on the increasing demand from AI and data centers. An analyst from Seeking Alpha highlighted that the NAND market is expected to remain undersupplied through 2026, creating a favorable environment for price increases and margin expansion. Benchmark increased its fiscal year 2026 estimates for Sandisk, projecting non-GAAP earnings of $6.76 per diluted share on sales of $9.13 billion.

Morgan Stanley noted the significant orders from multiple hyperscalers, totaling tens of exabytes, which could drive NAND pricing higher than previous expectations. While Cantor Fitzgerald and Goldman Sachs maintained 'Overweight' and 'Buy' ratings respectively, their price targets of $50 and $55 reflect a more conservative but still positive outlook.

Looking Ahead

Sandisk management anticipates further gross margin improvements, projecting an increase of 200 to 300 basis points for the upcoming quarter. The dissipation of fab utilization and start-up costs, which totaled $93.5 million last quarter, is expected by mid-fiscal year 2026, potentially boosting margins by an additional 300 basis points.

The company's strategic shift towards higher-performance and higher-margin offerings, including drives for AI PCs and next-generation SSDs, combined with expanded sales in hyperscale storage for data centers, positions it favorably. The development of future high-capacity products, such as 256TB and 512TB SSDs, could serve as key differentiators for market share growth. Investors will continue to monitor the overall demand trends from the AI sector and cloud deployments, as well as the ongoing supply-demand dynamics in the NAND market, which are expected to shape Sandisk's trajectory in the coming quarters.