After being spun off from Western Digital in February 2025 at a $5 billion market capitalization, Sandisk has emerged as one of the S&P 500’s standout performers. The stock not only secured inclusion in the index but also finished 2025 as its top gainer, and it has more than doubled year to date through January 21. This turnaround follows roughly three decades in which Sandisk’s market value lingered around the spin-off level, illustrating how long periods of stagnation can suddenly give way to explosive growth when industry dynamics shift in a company’s favor.

Sandisk’s management forecasts that total shipped memory capacity will more than double between the end of 2025 and the end of 2029, driven by rising requirements for inference-grade storage in artificial intelligence deployments. Data center revenue, which now represents about 12% of total sales, has fueled a gross margin that climbed to 29.3% in the most recent quarter as product shortages allowed the company to raise selling prices. With hyperscale cloud providers planning to deploy hundreds of billions of dollars in new infrastructure, Sandisk stands to benefit from continued tight supply and elevated pricing power.

Sandisk currently trades at roughly 31 times its projected earnings for the coming year, a premium to many traditional technology names but still below the multiples commanded by leading AI hardware suppliers. While this valuation reflects strong growth expectations, it underscores the difficulty of forecasting future cash flows—one of the key challenges highlighted by Warren Buffett’s intrinsic-value framework. Given the uncertainty around how long current demand trends will persist, investors may prefer a dollar-cost averaging approach to mitigate the risk of a sharp valuation contraction should AI spending slow.