Investors are keeping an eye on NVIDIA Corporation’s NVDA earnings later this month, as the results could signal strength in artificial intelligence (AI) demand and set the tone for the broader tech sector. NVIDIA has consistently reported strong quarterly performances, banking on robust demand for its state-of-the-art chips and CUDA software platform.
However, the stock has gained only 20.1% this year, indicating that investors’ expectations remain exceptionally high. Investors are also concerned that any possibility of a slowdown in AI spending, export restrictions on the sale of chips to China, and stiffer competition could weigh on NVIDIA’s margins.
Thus, it’s prudent for investors to closely watch strong performers across the AI ecosystem that have delivered substantial gains this year and are poised to scale higher in the near term. Sandisk Corporation SNDK stands out, with its shares surging 410.7% year to date and appearing well positioned for further upside. Let’s explore why Sandisk is the real AI winner –
Sandisk’s Growth and Pricing Power Fuel Upside
Sandisk recently reported strong fiscal fourth-quarter 2026 financial results. The company’s revenues for the fiscal fourth quarter were $8.97 billion, up 51% quarter over quarter, while revenues for the fiscal year 2026 reached $20.25 billion, up 175% from a year ago, according to investor.sandisk.com.
Datacenter has emerged as the key growth engine for Sandisk, with revenues from the segment jumping 437% in fiscal 2026. As AI models continue to grow larger and process more data, demand for high-capacity storage solutions has increased, benefiting Sandisk.
The sequential revenue growth was driven not only by selling more units but also by higher pricing, indicating that Sandisk’s customers are willing to pay more for the company’s products, translating into higher margins and stronger cash flows.
Looking ahead, Sandisk expects exceptionally high non-GAAP gross margins for the fiscal first quarter of 2027, guiding for 83% to 85%. For the fiscal first quarter, revenues are expected to come in at $10.3B-$10.8B, and at the midpoint, that would represent approximately 17.6% sequential growth. The outlook confirms that Sandisk expects strong growth and pricing momentum to continue into fiscal 2027.
Clients are increasingly interested in establishing strategic relationships with Sandisk. During the company’s Aprilearnings call Sandisk announced five New Business Model agreements, and since then it has signed five more, improving revenue visibility and enhancing cash flow predictability.
Therefore, Sandisk is a potential winner in the broader AI ecosystem, banking on strong growth, pricing power, margins and customer agreements. Consequently, the company’s expected earnings growth rate for the current year is 173.8%. The Zacks Consensus Estimate of $194.06 for SNDK’s earnings per share is up 1767.8% year over year.
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Brokers also remain confident of the company’s growth prospects, estimating an average short-term price target for SNDK stock of $2,287.05, which represents an 88.7% increase from the last closing price of $1,212.21. The highest target is $3,169, suggesting a potential upside of 161.4%.
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Sandisk currently has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
