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Investing.com -- Bank of America on Tuesday more than doubled its price objective on SanDisk, hiking it to $125 from $59 on stronger-than-expected AI-driven demand and tightening conditions in the NAND market.
Shares in SanDisk rose 1.5% in premarket trading.
Factors such as undersupply, rising enterprise solid-state drive (eSSD) adoption, and limited supplier capacity expansion are setting up a favorable cycle for the data storage provider, BofA analysts said.
BofA raised its estimates and the price target on SanDisk after “higher than expected demand from data centers starting to meaningfully impact pricing,” alongside restrictions on Chinese NAND production and richer configurations in consumer devices.
Analysts led by Wamsi Mohan also pointed to “lower appetite from NAND suppliers to increase capacity in the near-term,” which is supporting elevated prices. As a result, they expect SanDisk’s margins to improve further as hyperscale eSSD qualifications ramp in 2026.
Data center demand has already grown to about 12% of SanDisk’s revenue in the first half of 2025, double the prior-year level.
BofA forecasts cloud revenue to reach about 20% of the total in calendar year 2026 (C26), with cloud average selling prices (ASPs) potentially increasing by double digits.
The analysts highlighted SanDisk’s launch of a 256-terabyte NVMe eSSD designed for AI data lakes and compute-heavy applications as an example of product positioning to capture this growth.
Consumer and client end-markets are also expected to benefit, though to a lesser degree. Analysts projected richer configurations in phones and PCs as they transition to consumer edge-AI devices.
They forecast consumer ASP declines of 4% in 2026 and 9% in 2027, but said client pricing should remain flat in 2026 before falling modestly the following year.
BofA raised its 2026 earnings per share forecast to $6.93 from $5, well ahead of the Street’s $5.76. For 2027, it raised EPS to $11.15 from $7.02.
“Reiterate Buy on valuation, underappreciated joint venture (JV) assets, eSSD share gains in C26, and longer-term potential for industry consolidation,” analysts concluded.