Wall Street sharply raises the target price for "flash memory giant" SanDisk; Bank of America says, "In the storage supercycle, the price-to-book ratio should be at least 3-4 times."

Wall Street sharply raises the target price for "flash memory giant" SanDisk; Bank of America says, "In the storage supercycle, the price-to-book ratio should be at least 3-4 times."

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AI data center demand is driving a revaluation of the memory industry, with several Wall Street investment banks sharply raising their target prices for "flash memory giant" SanDisk.

According to Chasewind Trading Desk, Bank of America Merrill Lynch's latest research report has raised its target price from $125 to $230, while maintaining a Buy rating. BofA analysts believe that in the storage super cycle driven by AI demand, the price-to-book valuation multiple of this NAND supplier should be re-rated to 3–4 times.

BofA ML has raised its EPS forecast for SanDisk's fiscal year 2026 from $6.93 to $8.00 (up 15.4%) and revenue forecast from $8.91 billion to $9.17 billion (up 2.9%). The bank expects SanDisk’s revenue to grow at a 16% compound annual growth rate between fiscal years 2025 and 2028, with EPS growing more than fivefold over the same period. Analysts point out that rapidly growing data center demand is significantly boosting NAND flash pricing, while the high gross margin of enterprise SSD (solid-state drive) products will become the main profit driver.

In addition to BofA, Mizuho Securities previously raised SanDisk's target price from $180 to $215 on October 28, maintaining an Outperform rating. Jefferies, in last month's report, also sharply raised SanDisk's target from $60 to $180, with a Buy rating maintained.

SanDisk’s stock price has surged more than 500% over the past three months, making it one of the 12 best-performing US stocks in that period.

AI Demand Drives Rapid Growth in the Enterprise SSD Market

BofA analysts note that the data center business accounted for about 12% of SanDisk’s revenue in the first half of fiscal 2025, doubling from 6% a year earlier. The bank expects double-digit bit growth in the cloud market in fiscal years 2026 and 2027, during which SanDisk is expected to gain more market share.

Enterprise SSD (eSSD) products are becoming SanDisk’s core growth engine.

With eSSD gross margins approaching 50% of revenue, BofA expects this business to account for nearly one-third of SanDisk’s total gross profit, even though it represents only a mid-single-digit percentage of total bit shipments. This shift toward a high-value product mix enables SanDisk to maintain relatively resilient pricing, even as overall NAND average selling prices face downward pressure.

Analysts say that whereas the average selling price of SanDisk's aggregate NAND was previously expected to decline at a mid-single-digit compound annual rate until fiscal 2028, they now expect it to be "significantly better than" previous forecasts, mainly due to the continued increase in eSSD's share of the product mix and growth in eSSD demand driven by HDD shortages.

NAND Supply-Demand Imbalance Drives Revaluation

BofA believes that the current AI data center construction boom and shortages of both NAND and HDD are pushing producer gross margins to record highs. Over the past five years, NAND manufacturers' price-to-book valuation multiples have fluctuated between 0.4 and 4 times, reflecting the cyclical nature of industry profitability and cash flow generation.

BofA expects that driven by a strong storage cycle, SanDisk's share price will be re-rated to at least 3–4 times book value. The bank bases its target price on a 2.9x 2026 fiscal year price-to-book ratio, slightly below the 3.4x global storage industry average, mainly considering SanDisk’s larger exposure to the consumer market compared to peers, as well as its relatively early stage as a newly publicly listed company.

Analysts emphasize that NAND suppliers are currently reluctant to expand capacity, which will help maintain the supply-demand imbalance. BofA expects that this prolonged supply shortage will further boost margins and provide a foundation for revaluation.

BofA’s confidence in SanDisk’s ability to achieve stronger profitability in the storage super cycle is reflected in its EPS forecasts for 2027 and 2028, which have been raised to $14.38 and $16.04, far above the prior forecasts of $11.15 and $11.68 respectively.

Investment Banks Continue to Raise Target Prices

Both Mizuho and Jefferies believe that SanDisk is showing great resilience in NAND pricing.

Mizuho indicates that limited supply will continue to drive up DRAM and NAND market prices, and expects SanDisk to see improvements in sales and margins by 2026.

Jefferies likewise remains confident about SanDisk's future, believing that as AI continues to drive industry growth, AI applications are also powering demand for high-capacity storage solutions.

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