Here's Why the SanDisk Stock is Soaring

SanDisk Corporation stock jumped 10.1% on Tuesday, July 21, trading at $1,532 per share as buyers returned to technology hardware companies. The surge follows a steep month-long decline that saw the share price drop 38% from its record high of $2,354 set in late June.

Other storage and memory companies also gained, with Western Digital rising 12.2% and Micron Technology adding 10.5%.

Investment banks issued updated reports citing expanding supply shortages for high-capacity artificial intelligence data center hardware.

Morgan Stanley analyst Joseph Moore raised expectations for memory chip prices, projecting price increases of at least 25% between the second and third quarters of 2026.

Moore told clients that memory capacity shortages will persist through 2028 because data center operators continue purchasing all available supplies.

Moore detailed the supply constraints in a note to investors on Tuesday:

"In a cycle driven entirely by data centers, mixed signals from consumer, PC, and smartphone markets will affect spot markets and inventory levels at different points in time."

"AI is consuming so much DRAM that there isn't enough capacity left for other industries, and we're seeing clear signs everywhere that this is a genuine bottleneck."

Bernstein analyst Mark Newman maintained a Buy rating on SanDisk with a price target of $3,000 per share.

Newman pointed to three-to-five-year supply contracts that guarantee minimum pricing floors for SanDisk's NAND flash memory. These agreements cover approximately 60% of product volume, protecting corporate profits during potential industry downturns.

Newman explained how financial guarantees in customer contracts function over time:

"In reality, this ratio is dynamic."

SanDisk reported third-quarter revenue of $5.95 billion, reflecting a 251% increase from the previous year. Non-GAAP gross margins reached 78.4% as sales shifted toward high-margin data center solid-state drives.

Wall Street projects fourth-quarter revenue will reach between $7.75 billion and $8.25 billion when SanDisk releases earnings on August 5.

Rapid component price increases create cost pressures across the broader electronics market. Apple Chief Executive Tim Cook discussed price pressure during an interview with The Wall Street Journal:

"Unfortunately, price increases are unavoidable."

Industry executives express caution regarding long-term price sustainability.

SK Hynix Chairman Chey Tae-won warned that high memory prices risk slowing PC and smartphone sales, which could prompt competitors to build additional factory capacity.

SanDisk management sold approximately $10.2 million in company stock over the past three months, adding to market caution ahead of the August earnings release.