In its latest research note, Barclays increased its 12-month price target for Sandisk by 15% to reflect stronger-than-expected revenue growth in the company’s flash memory business. The firm cited a 22% year-over-year rise in NAND bit shipments during Q1, driven by robust demand from cloud service providers and smartphone manufacturers. Barclays now forecasts Sandisk’s revenue to reach $7.8 billion in fiscal year 2024, up from its prior estimate of $6.9 billion, and expects adjusted operating margin to expand by 180 basis points over the same period. The broker also highlighted Sandisk’s optimized cost structure following its adoption of BiCS8 three-dimensional NAND technology, which it said will underpin a 10% reduction in cost per bit by mid-year.

Sandisk’s edge storage segment experienced a 30% quarter-over-quarter jump in revenue as enterprise customers upgraded to Windows 11 systems requiring higher onboard NAND capacity. Research firm Context estimates that average NAND content per commercial PC rose from 128GB to 256GB during the first quarter, benefiting Sandisk’s embedded flash solutions. Management indicated on its latest earnings call that the edge unit, which now accounts for 18% of total sales, will sustain double-digit growth through fiscal 2025 due to ongoing corporate refresh programs and commitments from three leading PC OEMs representing more than 40% of global shipments.

Analyst firm Bernstein projects that surging AI workloads will drive a 25% annual increase in nearline storage capacity demand over the next three years, creating a tailwind for Sandisk’s high-density HDD and SSD products. The research note pointed out that each new generation of large language models and image-processing AI requires up to 50 petabytes of fast-access capacity, positioning Sandisk and its key partner Seagate to capture additional market share. Bernstein raised its estimate for Sandisk’s addressable market in AI-related storage to $3.5 billion by 2026, compared with $2.2 billion in 2023, and sees incremental revenue contribution of $400 million in fiscal 2024 alone.