Sandisk (NASDAQ: SNDK) has undoubtedly been one of the highlights of the stock market in the past year. Since spinning off from Western Digital and becoming a stand-alone company (again) in February 2025, Sandisk’s stock is up more than 5,655% as of the time of writing. That means $1,000 invested then would be worth $57,550 today.
All hasn’t been peachy keen, though. The stock has been notoriously volatile, including a recent 11.4% single-day decline after hitting an all-time high just two days prior.
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Considering recent performance and where Sandisk stands now — with a $310 billion market cap as of June 15 — is it closer to retracting to $100 billion or growing to a $500 billion market cap? Let’s take a look.
What worked in Sandisk’s favor this past year?
Sandisk makes important storage devices that are used in data centers for artificial intelligence (AI) training, scaling, and deployment. As tech hyperscalers such as Amazon, Microsoft, and Apple ramped up their data center build-outs, these storage devices became much more in demand, leading to a supply shortage.
This worked in Sandisk’s favor because the company has been able to exploit the shortage to raise prices and expand its margins significantly. Last year, its gross profit margin was around 26%. Now, it’s more than 78%.
Unsurprisingly, investors have flocked to Sandisk’s stock because of its dominant market position and perfect storm of supply and demand in the current AI boom.
What is Sandisk’s trajectory?
Right now, Sandisk is in the right place at the right time, but the storage shortage isn’t a long-term issue that the company can heavily lean on. At some point, production will catch up to demand, and Sandisk’s pricing power won’t be nearly as strong. That’ll inevitably compress margins, which have been a major draw for investors.
Sandisk’s industry is naturally cyclical, and right now it’s on the upswing. It’s fair to assume it will eventually pull back, but we can’t say definitively when. After its recent run-up, Sandisk’s stock is priced for near perfection.
That said, although I eventually expect a cyclical cooling period, Sandisk is sitting on a $42 billion backlog that includes multiyear contract agreements. That could help insulate the company from sudden price drops when supply inevitably catches up.
