Sandisk shares surged 11% Friday, extending one of the most extreme semiconductor rallies of the year as investors positioned ahead of the company’s addition to the S&P 100 and continued betting that artificial-intelligence infrastructure will keep global NAND flash supply tight.
The stock closed at $1,791.82 after trading as high as $1,797, with roughly 17 million shares changing hands. Sandisk had already gained 6.2% Thursday, producing a two-day advance of more than 17%.
The S&P 100 move likely contributed to the buying, but it was not new information.
S&P Dow Jones Indices announced on September 4 that Sandisk would replace Colgate-Palmolive in the index before trading begins September 21. Dell, Palo Alto Networks and Arista Networks are also joining the large-cap benchmark.
Funds that track the index must adjust their holdings around the effective date, creating mechanical demand for incoming stocks.
But Friday’s rally also occurred during another strong session for semiconductor and AI-infrastructure names. Sandisk’s move therefore cannot be cleanly attributed to index buying alone.
The larger story is the earnings transformation that made Sandisk large enough to join the S&P 100 in the first place.
Its stock is up roughly 655% in 2026, even after retreating substantially from a 52-week high above $2,350.
Data Centers Have Changed the Business
Sandisk’s most recent quarter bears little resemblance to the NAND market investors were evaluating a year ago.
Fiscal fourth-quarter revenue reached $8.97 billion, up 51% from the previous quarter and 372% from a year earlier.
About two-thirds of the sequential revenue increase came from higher pricing rather than additional volume.
That detail is critical.
NAND has historically been one of the semiconductor industry’s most cyclical markets. Manufacturers add capacity, supply exceeds demand, memory prices collapse and margins follow.
The current cycle has moved in the opposite direction.
AI data centers are consuming increasingly large quantities of high-performance flash storage at the same time suppliers remain disciplined about adding capacity. Sandisk says it expects AI-related demand to remain strong through at least calendar 2027.
Data-center revenue reached $2.98 billion during the fourth quarter, more than double the previous quarter’s $1.47 billion and up from only $213 million a year earlier.
For all of fiscal 2026, data-center revenue increased 437% to $5.15 billion.
Sandisk’s overall gross margin reached 84.6% in the fourth quarter, compared with just 26.2% a year earlier. GAAP net income climbed to $6.9 billion, or $43.97 a diluted share.
Those are extraordinary economics for a business that historically operated through violent pricing cycles.
The Next Quarter Is Expected to Be Even Larger
Management does not expect the fourth quarter to mark the peak in revenue.
Sandisk forecast fiscal first-quarter 2027 sales between $10.3 billion and $10.8 billion.
At the midpoint, that would represent another 18% sequential increase from the record fourth quarter.
Non-GAAP gross margin is expected between 83% and 85%, while adjusted diluted earnings are forecast at $44 to $46 a share.
The combination matters more than revenue growth alone.
Memory producers have often generated rapid sales increases near the top of a cycle only to see pricing collapse as new capacity arrives.
Sandisk is arguing that the current market will behave differently because a growing portion of future production is being committed through multiyear customer agreements rather than sold into short-term spot markets.
The company calls those contracts New Business Model agreements.
They commit Sandisk to supply specified volumes while customers agree to purchase those products over multiple years. Pricing typically includes fixed and variable components, and customer obligations are backed by cash deposits or other financial guarantees.
Sandisk said at its August investor day that agreements with eight customers already covered approximately half of expected bit shipments in fiscal 2027 and about two-thirds in fiscal 2028.
After the end of fiscal 2026, Sandisk signed two additional agreements carrying an aggregate transaction price of $31.3 billion.
The contracts do not eliminate the memory cycle, but they could reduce its severity by giving Sandisk greater visibility into both demand and pricing.
Sandisk Is Pricing In a Different Kind of NAND Company
Management is now putting unusually aggressive long-term financial targets behind that strategy.
For fiscal 2028 through fiscal 2030, Sandisk expects revenue to grow at a mid-to-high-teens annual rate while sustaining non-GAAP gross margins around 80% and operating margins around 75%.
It is also targeting adjusted free-cash-flow margins near 50%.
If those targets are achieved, Sandisk would look considerably less like the highly cyclical memory supplier investors historically assigned low earnings multiples to and more like a structurally high-margin AI infrastructure business.
That is the argument embedded in the stock’s enormous rerating.
The company has also authorized another $14 billion of share repurchases, bringing its remaining authorization to $15.5 billion after the latest earnings report.
But the stock price has moved so quickly that expectations are becoming a meaningful risk of their own.
At Friday’s close, analysts tracked by S&P Global carried an average target around $2,125, roughly 19% above the stock.
The range is extremely wide.
The lowest published target is around $1,000 while the highest reaches $3,600.
That spread is a useful measure of how uncertain the eventual earnings power of the current NAND cycle remains.
The Supply Shortage Is Both the Opportunity and the Risk
Friday’s move did not occur in isolation.
Other memory and storage names have also rallied as investors become increasingly convinced that AI infrastructure demand is absorbing available supply faster than manufacturers can expand it.
The industry is attracting new competition as a result.
China’s ChangXin Memory Technologies is preparing to enter NAND flash production, according to Reuters, broadening beyond its existing DRAM business as global shortages make flash more strategically important.
Chinese rival YMTC has also been expanding.
Those projects will take time to reach meaningful scale, but they illustrate the normal response to extraordinary memory profitability: competitors eventually try to add supply.
Sandisk faces its own execution risks as well.
Its long-term contracts require the company to manufacture enough qualified product to meet customer commitments. Its annual filing warns that production shortfalls could trigger financial penalties or contract termination.
The agreements also do not guarantee that today’s unusually favorable pricing will persist forever.
If AI infrastructure spending slows, customers consume fewer bits than expected or competitors bring significant capacity online faster than anticipated, the valuation could adjust much faster than the contracts themselves.
That matters after a stock has risen more than sixfold in less than nine months.
Monday’s S&P 100 inclusion will create another near-term technical event as index funds complete their rebalancing.
The more important catalyst comes after that.
Sandisk’s fiscal first-quarter results will test whether revenue can actually move above $10 billion while gross margins remain near the extraordinary 80%-plus level management now expects.
If those numbers hold, the argument that AI has structurally changed the economics of NAND becomes stronger.
If pricing or margins begin normalizing sooner than expected, Friday’s $1,792 share price leaves far less room for disappointment than Sandisk had when this cycle began.