SanDisk: When a Spin-off Becomes the Star of the AI Rally
For a long time, SanDisk operated in the shadow of larger tech stocks. That has changed: What began a year and a half ago as an unremarkable spin-off from Western Digital is now one of the biggest winners of the AI boom, although the stock has also been subject to significant price volatility. The reason for this is not a passing fad, but a tangible surge in demand: the more data centers dedicated to artificial intelligence are built, the greater the need for storage becomes. SanDisk is right in the middle of this trend. But as the stock soars, so do expectations. It remains to be seen whether this pace can be sustained.
AI needs storage
When people talk about the AI boom, the focus is usually on companies like Nvidia. But powerful AI systems require not only computing power but also large amounts of storage and this is exactly where SanDisk comes in. The company specializes in flash memory, which is used, among other things, in high-speed storage drives for data centers.
As AI infrastructure expands, demand for such storage solutions is rising. This is already reflected in the company’s financial results. According to its annual report (SanDisk, 08.2026), SanDisk generated revenue of $20.25 billion in fiscal year 2026, up from $7.36 billion the previous year. The data center business performed particularly well: Revenue in this segment rose by 437 percent, driven in part by higher prices (SanDisk, 08.2026).
From Spin-Off to AI Profit-Maker
Just how much this trend has boosted SanDisk, of all companies, is evident from its own stock price performance. Following its spin-off from Western Digital, SanDisk began trading independently on the stock market for the first time in February 2025. At that time, one share cost about $36. Just under a year later, the price stood at around $620. At times, SanDisk’s performance thus significantly outpaced that of Nvidia, one of the biggest beneficiaries of the AI boom (Handelsblatt, 01.2026).
This development was also driven by the fact that, following the spin-off, SanDisk was valued independently of its former hard drive business for the first time. What had been a division of a diversified storage company became a standalone flash memory manufacturer that can benefit directly from the growing demand for AI infrastructure.
However, for this revaluation to be justified in the long term, SanDisk must demonstrate that the current upswing is more than just a short-term demand cycle. The company is therefore seeking to secure a portion of its future business today.
SanDisk Secures Its Growth
Long-term supply contracts are intended to make business operations more predictable. According to Reuters (Reuters, 08.2026), the company had agreements with six customers totaling $93.9 billion as of early August. By fiscal year 2028, approximately two-thirds of production is expected to be secured through such contracts (Reuters, 08.2026).
The longer-term goals are also ambitious. For the years 2028 through 2030, SanDisk forecasts annual revenue growth in the mid- to high-double-digit percentage range, as well as an adjusted gross margin of approximately 80 percent (SanDisk, 08.2026). These are corporate targets and not guaranteed outcomes. Actual results may differ significantly from the forecasts. This could allow the business model to move away from a traditional, highly volatile memory cycle. However, this would require that demand remains high and that SanDisk is able to maintain its prices.
Risks Remain
The higher expectations for SanDisk rise, the greater the risk of disappointment becomes. The stock’s strong performance has already attracted professional investors. Leopold Aschenbrenner’s hedge fund “Situational Awareness” built positions totaling approximately $5 billion in SanDisk and Micron during the second quarter of 2026. Together, these two positions accounted for more than half of the fund’s portfolio at that time, which stood at $20.2 billion. This high concentration demonstrates just how strongly the fund was betting on the continued growth of the memory segment, while at the same time making the portfolio particularly vulnerable to price fluctuations (FuW, 08.2026).
SanDisk’s stock price in the summer showed just how quickly sentiment can shift: From a record high of $2354.39 on June 22, the price fell to around $1015.89 by July 29. This represents a plunge of about 57 percent within five weeks (TradingKey, 08.2026). Among other factors, the trigger was the initial public offering (IPO) of the Chinese memory manufacturer ChangXin Memory Technologies, which fueled concerns about growing competition from China.
This episode highlights a fundamental risk: even strong earnings growth does not protect against price losses if the market’s expectations rise faster than the business itself. The core business also remains cyclical: if the supply of memory chips grows faster than demand, prices and margins could come under pressure again. For SanDisk, this will determine whether the current boom will translate into a sustainably profitable business or whether the memory cycle will eventually catch up with the high expectations.