Sandisk surges 857% as AI memory shortage extends to 2028

Sandisk's 857% surge in the first half of 2026 made it the best-performing S&P 500 stock, fueled by an AI-driven memory shortage that analysts now expect to persist until at least 2028.

An AI-driven memory chip shortage has pushed Sandisk's shares up 857% this year, with RAM prices forecast to rise 40% to 50% in the third quarter alone as supply fails to keep pace with data center demand.

"The expected price surge is well beyond what Western investors and Jefferies had initially anticipated," Ethan Tan, a memory industry consultant and former Samsung China executive, said in a briefing to Jefferies Equity Research analysts.

Sandisk's revenue surged 251% year-over-year in its fiscal third quarter, outpacing even Micron Technology's 196% growth in the comparable period. The company now trades at 32.3 times forward earnings, up from 19.3 less than a year ago. Six other S&P 500 memory and AI infrastructure stocks have more than doubled this year, including Micron at 304%, Intel at 278% and Western Digital at 271%.

The shortage is unlikely to ease soon. Modern semiconductor advances will increase supply by only 7% to 8% in 2026, according to Tan's estimates, while AI data center buildout absorbs an ever-larger share of production. Relief may not arrive until 2028, when expanded manufacturing capacity and potential Chinese NAND output could begin to close the gap.

Memory Prices Enter Uncharted Territory

The three dominant memory suppliers — Samsung, SK Hynix and Micron — now account for nearly all global DRAM and NAND production, and all three are prioritizing server-grade memory over consumer products because of stronger profit margins. That commercial choice has direct consequences for end users: RAM component prices could jump 40% to 50% in the third quarter versus the prior quarter, followed by another 30% to 40% increase in the fourth quarter, according to Tan's forecast shared with Jefferies.

For 2027, Tan projects a 40% to 45% annual increase before a potential 15% to 20% decline in 2028. The multi-year outlook suggests the current cycle is structurally different from past memory booms, which typically lasted 12 to 18 months before supply caught up.

Sandisk's Fundamentals Outpace Peers

Sandisk's financial performance has exceeded even the elevated expectations set by Micron's blowout quarter. The company's 251% year-over-year revenue growth and 97% sequential growth in its fiscal third quarter both topped Micron's comparable figures of 196% and 75%, respectively. Earnings have exploded 644% and 7,903% in the past two quarters, with the just-ended June quarter expected to show 11,500% growth.

Micron's fiscal third-quarter results, released last week, confirmed the strength of the cycle. The company smashed guidance and told investors to expect more than 20% sequential revenue growth in the current quarter. Micron also disclosed multi-year strategic customer agreements that provide revenue visibility well beyond a typical product cycle — a sign that tech giants are locking in memory supply rather than betting on a near-term price correction.

Sandisk reports its August-quarter results next month, and the Micron read-through suggests similar multi-year contract wins could be on the horizon.

Who Wins, Who Loses

The memory boom has created clear winners and losers across the semiconductor landscape. Beyond Sandisk and Micron, Intel has surged 278% this year as the US government and Nvidia took stakes in its foundry business, while Apple and others plan to use Intel's manufacturing capacity amid chipmaking constraints. Marvell Technology has gained 250% on its custom AI chip design business with Amazon.com.

The concentration of gains is extreme. Just 10 stocks accounted for nearly all of the Nasdaq-100's 20% first-half advance, with Micron alone contributing 26% of the index's returns, according to Jefferies trading-desk analyst Jeffery Favuzza. For the S&P 500, the same group of 10 stocks drove 78% of the index's 10% gain.

The losers are equally telling. Software stocks including ServiceNow, Salesforce and Intuit were among the first half's biggest decliners as investors rotated out of application-layer names into infrastructure plays. Guggenheim's John DiFucci upgraded Salesforce to buy from neutral this week, arguing that "the Armageddon scenario currently priced into the stock is misaligned with reality."

What's at Stake for Investors

Sandisk's valuation has expanded dramatically alongside its share price, but the fundamental story may still have room to run. At 32.3 times forward earnings, the stock carries a premium that reflects the multi-year visibility provided by AI infrastructure spending. If Sandisk reports similar multi-year customer agreements in August — as Micron did — the current valuation could prove justified.

The risk is that the memory cycle peaks sooner than expected. Chinese suppliers such as CXMT remain constrained by restricted access to advanced fabrication tools including EUV lithography machines, limiting their ability to add supply in 2026 or 2027. But if manufacturing capacity expands faster than projected, or if AI CapEx growth decelerates, the pricing power that has driven Sandisk's rally could reverse quickly.

For now, the data points in one direction. AI data centers are consuming an ever-larger share of global memory output, consumer devices are facing higher component costs, and the supply response remains years away. Sandisk, as the purest public-market bet on NAND flash, stands at the center of that dynamic.

This article is for informational purposes only and does not constitute investment advice.