The AI memory supercycle has emerged as one of 2026’s most defining stories, and also one of its most contested. Hyperscaler capital expenditure is expected to reach $750 billion this year, with Goldman Sachs forecasting $7.6 trillion in total AI infrastructure spending through 2031, resulting in a supply shortage of NAND and DRAM memory as data center demand for high-performance storage clashes against the chipmakers’ capacity limitations.
That scarcity has been aggravated by reports that TSMC may boost contract chip manufacturing prices by up to 10% in 2027, with some products facing increases of up to 20%, owing to increased materials, equipment, and overseas facility development expenses.
Explosive Financial Scaling
Sandisk Corporation (NASDAQ:SNDK) is one of the names that have benefited the most from the supercycle. Since its February 2025 spinoff from Western Digital at $35.06 per share, Sandisk Corporation (NASDAQ:SNDK) has become the single best-performing stock in the S&P 500, climbing up to 858% at its late-June peak on the back of explosive fundamentals: fiscal Q3 2026 revenue reached $5.95 billion, up 97% sequentially and 251% year-over-year, with datacenter revenue specifically up 645% year-over-year.
Management anticipates continued sequential acceleration in the fourth quarter of fiscal 2026, with total revenue expected to range between $7.75 billion and $8.25 billion and non-GAAP earnings per share between $30 and $33, as gross margins increase to near 80%. More crucially, Sandisk Corporation (NASDAQ:SNDK) reported that its remaining performance obligations and contracted backlog came in between $41.6 billion and $42 billion. Sandisk’s entire 2026 enterprise AI storage capacity is sold out under long-term agreements, thus locking in multibillion-dollar cash flows for the rest of the calendar year.
The Semiconductor Pullback
Despite its strong operational reports, Sandisk Corporation (NASDAQ:SNDK) has not been immune to macroeconomic turbulence. In mid-July, shares fell 8% to 15% across a number of sessions, contributing to a 39% slide from late-June record highs, as the Philadelphia Semiconductor Index fell more than 20%. According to market analysts, this pullback is the result of an industry-wide valuation adjustment rather than a structural decline in memory demand or corporate earnings power.
Wall Street research desks have leveraged the downturn to adjust price targets based on improved earnings potential instead of speculative valuation multiples. On July 5, Goldman Sachs boosted Sandisk’s price objective to $2,200 from $1,200, keeping its Buy rating ahead of the company’s earnings announcement on August 5. The mechanics of Goldman’s target adjustment reflect strong institutional confidence: the bank cut its target valuation multiple from 22x to 20x while doubling its normalized EPS projection from $55 to $110.
Smart Money’s Opinion
Institutional data show a significant difference between retail opinion and smart-money conviction. While short-term trader concerns about peak-cycle dynamics fueled the recent share price decline, short interest in Sandisk Corporation (NASDAQ:SNDK) remains relatively low at 4.93% of the public float. The low short stance shows that experienced bears are hesitant to place aggressive short wagers against a company with a $42 billion contracted backlog.
Meanwhile, hedge fund conviction has greatly increased. According to Insider Monkey’s database, 114 elite funds owned stakes in Sandisk Corporation (NASDAQ:SNDK) at the end of the first quarter of 2026, up from 75 in the previous quarter. This 52% increase in hedge fund holdings in a single quarter represents one of the most significant institutional buying surges in the technology sector.
Insider Monkey’s Verdict
Sandisk Corporation (NASDAQ:SNDK) is a solid opportunity for institutional investors looking to capitalize on the AI storage supercycle. A 39% drop from peak values, owing mainly to macro semiconductor multiple pressure, has produced an appealing entry point for a company with a $42 billion contracted backlog and enterprise AI production capacity committed through 2026. All in all, the current selloff provides an ideal window ahead of the August 5 results catalyst.
While we acknowledge the risk and potential of SNDK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SNDK and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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