If you'd asked most investors a year ago which company would lead the S&P 500 in returns, SanDisk probably wouldn't have cracked the top 100 guesses. The brand, synonymous with camera memory cards and USB flash drives, seemed like a relic of consumer electronics past. Yet here we are: SanDisk shares have soared more than 860% since the company was spun out of Western Digital in February 2025, making it by far the best-performing stock in the index.

The Numbers Are Staggering

On Tuesday, January 6, SanDisk stock surged 27.56%—its second-largest single-day gain since returning to public markets. The rally brought year-to-date gains to more than 46% in just the first week of 2026. At approximately $350 per share, the company has established new record highs in multiple consecutive sessions.

Bank of America analyst Wamsi Mohan responded by hiking his price target to a Wall Street-high $390, suggesting shares could rise another 11% from current levels. Benchmark analyst Mark Miller called the rally "unprecedented" and "an unparalleled event."

"This is an unprecedented rally. What we're seeing is an unparalleled event in the storage sector."

— Mark Miller, Benchmark Analyst

What Changed?

The answer is artificial intelligence—but not in the way most investors initially understood AI's impact on tech stocks. While attention focused on GPU makers like Nvidia and AI software companies, the market overlooked a critical bottleneck: storage.

AI systems don't just need computing power—they need to move and store vast amounts of data. Training large language models requires ingesting petabytes of text, images, and video. Running AI inference at scale demands fast access to model weights and user data. And as AI moves from cloud data centers into edge devices—phones, cars, robots—storage becomes even more critical.

SanDisk's flash memory products have emerged as the technology of choice for AI inference workloads. Unlike traditional hard drives, flash storage offers:

  • Speed: Near-instantaneous data access crucial for real-time AI applications
  • Power efficiency: Lower energy consumption reduces operating costs and heat generation
  • Reliability: No moving parts means better durability in data center environments
  • Density: Continued improvements allow more storage in smaller physical footprints

The Jensen Huang Effect

The catalyst for this week's surge came from an unlikely source: Nvidia CEO Jensen Huang's keynote at CES 2026. During a Q&A session, Huang discussed using a dedicated storage tier for AI workloads—a comment that Bank of America analyst Mohan immediately recognized as a positive indicator for SanDisk's NAND technology.

When the architect of the AI revolution explicitly endorses a technology, the market pays attention. Huang's comments validated what SanDisk's management has been telling investors for months: flash storage is no longer a commodity business but a critical enabling technology for artificial intelligence.

From Spin-Off to Superstar

SanDisk's journey to this moment has been remarkable. After nine years as a subsidiary of Western Digital, the company returned to public markets in early 2025 as an independent, pure-play flash memory company. The spin-off allowed SanDisk to focus exclusively on NAND flash storage while Western Digital concentrated on hard disk drives.

At the time, some analysts questioned whether the separation made sense. The NAND market had been challenging, with cyclical oversupply pressuring prices and margins. But the spin-off proved perfectly timed to catch the AI wave.

Financial Transformation

  • Q1 2026 revenue: $5.3 billion, up 27.74% year-over-year
  • Projected 2026 revenue growth: Over 45%
  • EBITDA growth: Expected to exceed 200% year-over-year

The Broader Storage Thesis

SanDisk isn't alone in benefiting from AI-driven storage demand. The broader memory sector has rallied strongly to start 2026:

  • Micron (MU): Up 13% year-to-date
  • Lam Research (LRCX): Up 16% year-to-date
  • Samsung: Projected to reach 100 trillion won in operating profit in 2026
  • SK Hynix: Benefiting from high-bandwidth memory demand for AI accelerators

The memory "supercycle" that some analysts predicted appears to be materializing, driven not by smartphones or PCs—the traditional demand drivers—but by data center buildouts for AI workloads.

Risks and Considerations

With a stock up 860%, the obvious question is whether SanDisk has run too far too fast. Several risks merit consideration:

  • Valuation: At current prices, SanDisk trades at a significant premium to historical multiples and some semiconductor peers
  • Cyclicality: The memory industry has historically been prone to boom-bust cycles as capacity additions overshoot demand
  • Competition: Samsung, SK Hynix, and Micron are all investing heavily in NAND capacity
  • Technology shifts: New storage technologies could eventually compete with NAND flash

That said, bulls argue the AI demand cycle is still in early innings, and supply growth remains constrained relative to the explosive demand from hyperscale data centers.

The Lesson for Investors

SanDisk's transformation offers a broader lesson about AI investing: the most obvious beneficiaries—GPU makers, AI software companies—aren't always the only winners. Infrastructure plays throughout the technology stack can capture significant value as the AI buildout proceeds.

Storage, power generation, cooling systems, networking equipment—each represents a potential bottleneck that AI expansion must address. Investors who look beyond the headlines to understand the full technology stack may find opportunities that the market has overlooked.

For now, SanDisk's improbable journey from consumer electronics brand to AI essential continues. The company known for helping photographers save vacation photos is now helping power the most transformative technology of our era.