AI inference sparks NAND supercycle! After SanDisk (SNDK.US) surged 629% this year, JPMorgan still sees it rising to $2,250

According to Zhitong Finance APP, JPMorgan analyst Harlan Sur recently resumed coverage of SanDisk (SNDK.US), assigning an "Overweight" rating with a target price of $2,250. This target implies an upside of nearly 26% from the stock's closing price of $1,786.85 on Monday.

Data shows that Sur ranks 17th among 12,474 Wall Street analysts tracked by TipRanks, with a success rate of 72% and a five-star rating. When an analyst with such an outstanding track record sets a target price of $2,250 for a stock, it certainly deserves investors' attention.

Statistics indicate that SanDisk's share price has risen 628.74% year to date, making it the biggest gainer among S&P 500 constituents, with a gain more than twice that of second-ranked Dell Technologies (DELL.US). Over the past year, SanDisk's stock has surged 3,415.66%, and over the past three years, the increase amounts to 4,580.86%.

Sur's resumption of coverage comes after SanDisk’s Investor Day on August 13, primarily reflecting three specific themes.

First, this further confirms SanDisk’s market position as one of the world’s top five NAND flash suppliers, as the NAND market is undergoing a structurally driven demand expansion propelled by AI inference technology. According to disclosures from SanDisk’s Investor Day, the Total Addressable Market (TAM) for enterprise data center flash is expected to expand to 1.2 zettabytes by 2030, mainly driven by growing demand for AI inference workloads and KV cache storage.

Second, SanDisk’s New Business Model (NBM) framework is reducing the cyclicality of its business. Currently, the NBM agreements cover eight major customers and include committed purchase volumes and minimum financial guarantees. These agreements account for roughly 50% of SanDisk’s bit shipments in fiscal 2027, and about two-thirds for fiscal 2028. For a company historically characterized by highly cyclical revenues, being able to lock in two-thirds of future output through multi-year take-or-pay agreements fundamentally improves its earnings quality.

Third, SanDisk’s technology roadmap includes the BiCS9 and BiCS10 QLC nodes revealed at the Investor Day. Compared to BiCS8, BiCS10’s bit density increases by 60%. High Bandwidth Flash technology, designed for AI inference applications, is gaining stronger support across the ecosystem. The company is not merely benefiting from the current NAND pricing environment but is building next-generation storage density advantages to further expand its competitive moat.

Q4 Results and Long-Term Financial Framework Support the $2,250 Target Price

Sur’s $2,250 target price is not without foundation. The Q4 fiscal 2026 results SanDisk reported on August 5 provide the financial backing for every figure in JPMorgan’s analysis.

According to the financial report, SanDisk’s Q4 revenue reached $8.97 billion, up 51% quarter-over-quarter and 372% year-over-year. Gross margin reached 84.6%, an increase of 6.2 percentage points from the previous quarter. GAAP operating profit was $7.04 billion. GAAP net profit amounted to $6.9 billion, with diluted earnings per share of $43.97. Full-year fiscal 2026 revenue reached $20.25 billion, up 175% year-over-year; GAAP diluted EPS was $73.76.

The data center business became the growth engine. SanDisk CEO David Goeckeler stated: "We ended fiscal 2026 with a leading technology portfolio, establishing data centers as a key growth pillar and further deepening our customer partnerships."

In Q4, SanDisk’s data center revenue reached $2.98 billion, a 103% sequential increase from Q3. Full-year data center revenue for fiscal 2026 was $5.15 billion, up 437% from $960 million in fiscal 2025.

Of the sequential increase in Q4 revenue, about two-thirds came from price increases, and one-third from higher volumes. This ratio accurately reflects the current supply-demand environment: customer demand is so strong that they are willing to accept higher prices without significantly cutting back their purchases.

For Q1 fiscal 2027, SanDisk expects revenue between $10.3 billion and $10.8 billion, non-GAAP gross margin between 83.0% and 85.0%, and non-GAAP diluted EPS between $44.00 and $46.00. If this guidance is achieved, revenue in just one quarter would exceed SanDisk’s total revenue for all of fiscal 2025.

In addition, the long-term financial framework SanDisk provided at Investor Day is another reason Sur dared to issue a $2,250 target price even after a large run-up in the stock. According to information disclosed at Investor Day, between fiscal 2028 and 2030, SanDisk expects revenue to grow at a mid-to-high single-digit percentage rate, with adjusted gross margin around 80%, adjusted operating margin around 75%, and adjusted free cash flow margin around 50%. The company has committed to returning 100% of excess cash to shareholders and still has $15.5 billion in share repurchase authorization remaining, creating a powerful compound return mechanism for patient shareholders.