The Artificial Intelligence (AI) Trade You Might Be Missing -- It's Up 700% This Year
Sandisk has further upside despite being one of the best stocks to own so far in 2026.
By Keithen Drury
If someone approached you and offered you the chance to buy a stock that's already up 700% this year, would you be interested? A lot of investors would immediately say no because they would think that all the upside has already been priced into the stock. However, that's the wrong way to approach it.
Investors should look at a stock fresh, without acknowledging prior gains. If it's priced right and there is more growth ahead, they should consider buying even if they missed the initial run-up.
One stock where I think this is the case is Sandisk (SNDK 4.56%). It has risen 727% as of market close Tuesday, which may have some investors ignoring it due to its strong past. However, its future is bright, and there can be more upside ahead for the bold investor.
Its core business is still expanding
Sandisk makes NAND memory, which is nonvolatile memory that maintains information even after power is cut off. This type of memory is slower than DRAM used in computing units, but it's still important for products like solid-state drives (SSDs).
Data centers need truckloads of SSDs for long-term data storage, and Sandisk cannot keep up with demand. As a result, prices for its SSDs are soaring, leading to record revenue and earnings growth.
The company and its peers are scrambling to get more production capacity ready to meet demand, but it may not be enough. AI hyperscalers plan on $650 billion in capital expenditures this year, breaking previous records. Next year, Nvidia predicts the amount will rise to $1 trillion. It likely has sound information on future demand, and trusting Nvidia is a smart idea for investors.
If SSD demand is proportional to data center spending, demand will nearly double from now through 2027. That bodes well for Sandisk, and Wall Street prognosticators are on board.
Analysts estimate that revenue will rise 122% during fiscal year 2027 (ending June 2027). That's another year of incredible growth, and earnings per share (EPS) estimates are also noteworthy. From fiscal 2026 to fiscal 2027, analysts expect EPS to rise from $65.45 to $183.05. If I price the stock on 2027 estimates, that values the stock at only 12 times forward earnings.
And 12 times forward earnings is a low price to pay for a company that's growing as fast as Sandisk is in an industry vital for data center expansion. I think that makes it a strong buy, and even though its stock has risen so much in 2026, it could still rise even further.