After Surging 4,885%, Is Sandisk Stock Still a Buy? Here's What History Says.

It is almost hard to believe that Sandisk (NASDAQ: SNDK) started trading on the Nasdaq at around $35 per share on Feb. 13, 2025.

In just over 16 months, it has surged some 4,885% to $1,745 per share as of July 2. Over the past 12 months, Sandisk has returned 3,780%, and it is up 635% year to date.

The numbers are just staggering, as any investors fortunate enough to buy at the IPO can attest. But after such an amazing run, can Sandisk stock keep it going, or is it time to take some profits?

Image source: Getty Images.

Supercycle for Sandisk

While Sandisk stock is "new" to the markets, it's been around a long time and actually was a public company in another life. The maker of NAND flash memory drives and solid-state storage drives for enterprises, data centers, and hyperscalers was a public company from 1995 to 2016, when it was acquired by Western Digital (NASDAQ: WDC). Back then, it was mostly known for retail storage flash drives, memory cards, and USB sticks.

Now it is a memory and storage drive for enterprises, capitalizing on the huge demand created by artificial intelligence (AI) computing. The supply of data storage and memory for AI computing cannot keep up with the booming demand, creating a supercycle for the leading stocks in this space, like Sandisk. The huge demand allows Sandisk to raise prices, pushing revenue higher.

In the latest quarter, Sandisk grew revenue 97% sequentially, meaning from the previous quarter, to $5.95 billion. Non-GAAP (adjusted) earnings were up 247% to $23.41 per share. In this quarter, its fourth, Sandisk anticipates revenue will rise between 30% and 38% and earnings per share will rise between 28% and 41%.

Within its rapidly growing data center business, Sandisk has more than $11 billion in financial guarantees through new contracts. It also has $42 billion in backlog from recently signed deals.

"Our technology and product portfolio are intersecting this extraordinary demand at exactly the right moment," CEO David Goeckeler said on the earnings call.

Is Sandisk still a buy?

The high demand for storage and memory is not slowing down anytime soon. Some analysts see the demand/supply imbalance lasting into 2030, and perhaps beyond. At an investor conference in May, Goeckeler said the flash memory market will remain "undersupplied for a long period of time."

So investors should not expect growth to slow down much at all. Then it becomes a question of the stock's valuation. Is it priced too high relative to its growth expectations?

The stock is currently trading at 61 times earnings and 31 times forward earnings. Given its growth expectations, that's fairly reasonable. Analysts expect Sandisk to grow revenue 124% next fiscal year and earnings 183%.

The vast majority of Wall Street analysts, about 79%, rate the stock a buy. It's hard to see it having anywhere near the growth it's had over the past year, and it could see a correction due to its valuation or profit-taking. In fact, the stock is down about 25% from its all-time high set in late June.

But Sandisk stock looks as if it will be a winner for a long time, even if it doesn't rise 3,780% over the next year. It may be one to put on your radar to buy on the dip.

Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Western Digital. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.