Sandisk shares jumped more than 27 percent on Tuesday. The surge came after Bank of America pointed to strong momentum following the CES event in Las Vegas.
The bank said Sandisk is set to benefit from a major change in how AI hardware is being built. Because of this, it raised its price target on the stock to 390 dollars from 300 dollars.
Bank of America analyst Wamsi Mohan said NAND memory is becoming more important in AI workloads. This shift became clearer after announcements made at CES.
At the event, Nvidia CEO Jensen Huang introduced new chips. These chips are designed to handle larger amounts of data by using a dedicated storage layer. This layer is connected through Nvidia’s BlueField 4 technology.
According to the bank, this change gives NAND memory a bigger role in AI performance. It also allows for major speed improvements in AI systems.
Bank of America kept its Buy rating on Sandisk. The firm cited attractive valuation, strong assets, lower expected costs, and rising market share in enterprise solid state drives.
Mohan said demand for NAND remains strong. Pricing is also holding up well. Data from TrendForce shows NAND prices could rise by 20 to 30 percent quarter over quarter in the fourth quarter. Another increase of more than 30 percent is expected in the first quarter.
The bank said there is meaningful upside to current estimates. This is because manufacturers are tightly managing supply. They are also shifting production toward higher margin products.
Sandisk is being careful with capacity. The company is flexible in how it allocates production across markets. The focus is moving toward higher margin areas.
Enterprise SSDs are currently the most active segment. Customer interest is strong in Sandisk’s BiCS8 based products and next generation platforms like Stargate.
Bank of America noted that margins are not yet at peak levels. This is due to startup costs and unused capacity. However, margins are expected to improve as production scales up.
The firm added that Sandisk expects growth in line with industry demand. This is forecast in the mid teens to low 20s range in fiscal 2026.
Sandisk plans to add capacity only if long term agreements support stable pricing and healthy margins.
Because of all this, Bank of America raised its revenue and earnings estimates for fiscal 2026. The new outlook reflects stronger margins and higher profitability.