The Rundown - Deep Dive: How Sandisk Became the Hottest Stock in the S&P 500

Episode Date: February 7, 2026

Sandisk’s stock has gone up over 1,500% in the last 12 months, so what is causing this surge?In today’s deep dive, Zaid breaks down how Sandisk went from a boring storage company to the hottest stock in the S&P 500. He explains what Sandisk actually does, why AI data center demand has completely reshaped the NAND memory market, the bull case moving forward and the risks tied to the memory cycle and rising competitionFollow us on Instagram (@TheRundownDaily) for bonus content and instant reactions.Check out the Public app for incredible investing tools and to support the show (LINK)

Welcome back to the rundown for another weekend deep dive. Today, we are talking about the hottest stock in the S&P 500 right now, Sandisk. Sandysk was the best performing stock in the S&P in 2025, jumping more than 500% and it's not slowing down so far. The stock is up another 160% in January. So in today's episode, we're going to take a look at what Sandis actually does, why AI has turned this boring storage company into the hottest stock in the world. the bull and bare case moving forward, and if the stock has any gas left in the tank, or if it's just another AI-fueled bubble waiting to burst.

We got a great one for you today. Let's dive in. Now, before we talk about all the numbers and the stock price, let's first talk about the origins of Sandisk and what the company actually does. You might be familiar with the name Sandus. The company co-created the SD card, which are used in cameras, phones, and pretty much anything at this point. You might have also bought a Sandys USB thumb drive in college.

This was before everything was on the cloud. So Sandis is a somewhat familiar name to most people. Now, what you might not know is that Sandus actually got bought in 2016 by Western Digital, another company that makes hard drives. The merger didn't really work out, though Western Digital was known for making traditional spinning hard disk drives, but investors wanted exposure to Sandys' high-growth flash memory business. So Western Digital spun off Sandisk in February of 2025, And since then, the stock has gone up like 1,500%.

So what does Sandys actually make? Well, the company develops and sells NAND flash memory. Now, without getting too nerdy here, NAND is like the technology that allows devices to store data even when the power is turned off. And every photo on your iPhone, every document on your laptop, lives on a NAN. It's like the backbone memory chip for almost all modern digital storage.

It's used in the cloud, it's using gaming devices, and even cars. And now NAN memory has become a key technological component that's powering the development of artificial intelligence. We're going to talk more about that in a bit. So yeah, Sandys sells NAN memory chips and their business has three main buckets. There's consumer, there's edge, and there's data center. Let's break down each one.

First up is consumer. This is the storage for regular people. I'm talking USB drives, memory cards for cameras, SSDs you buy a Best Buy for your PC, and the consumer division makes up about 30% of their overall revenue. Their second main bucket is Edge. This is the commercial and industrial market. Think cars, factories, medical equipment, industrial robots, surveillance systems. These devices need reliable storage that can handle tough conditions.

So Sandys makes storage for those components. And Edge is actually Sandis' biggest segment right now making up about 55% of their total revenue. And last up, and most importantly, you have data centers. And it's this segment that has the stock price going vertical right now. It's where all the AI magic is happening. See, when companies like Microsoft, Google, and Amazon build massive data centers to train AI models, they need a ton of fast storage. And that's where Sandus comes in.

Now, Data Centers is still the smallest segment for Sandys, accounting for about 15% of their total revenue. But it's growing the fastest, up 64% quarter over quarter, according to their latest earnings report, which is an insane growth rate right now. But something to keep in mind about the memory business, it's historically been very cyclical. So prices are volatile, supply and demand can swing widely, and companies go through massive boom and bus cycles. In fact, the entire industry went through a nuclear winter in 2023, with most major memory companies posting and operating loss.

But now, with AI and data centers exploding, that is changing the entire playbook and the business model. So let's talk about the bull case for Sandus. All right, so now let's talk about why this stock has been going parabolic over the last few months and why some think the stock still has room to run. The bullcase for Sandis basically comes down to one thing. There is a massive supply and demand mismatch of memory chips right now. Tech companies are spending hundreds of billions of dollars building AI data centers, and those data centers being built need tons of storage. See, training AI models and running AI inference,

which is when the model responds to questions, all of that requires a ton of fast storage to retrieve information quickly. On top of that, with AI, there is an explosion. of content being created. Most of it is slop, but all of it needs to be stored somewhere. So the demand for storage is going through the roof, but the supply can't keep up right now. Remember what I said earlier about the boom and bus cycle of memory companies and how they recently went through a nuclear winter about two years ago?

Well, a lot of these companies cut back on production. So now with the sudden explosion of AI, there isn't enough memory being made to meet that demand. In fact, it's going to take some time to increase supply because you can't just build a memory chip factory overnight. These fabs take years to construct and cost billions of dollars. So this supply and demand imbalance might persist for years, and that will allow Sandus to raise their prices and increase margins.

In fact, that's already starting to happen. Nan prices have gone up more than 50% in just the last three months. And Sandus now expects their margins to jump from 50% last year to more than 65% this year. That is a massive expansion and margin in a very short amount of time. And most importantly, Sandus is now using the, this moment to shift their business model. See, historically, memory was treated as a commodity.

Companies would buy it when they needed it at the current market rate. But that made it hard for Sandus to have predictable revenue so they would go through a boom and bus cycle. But now these big tech companies are so desperate to lock up supply of memory that they're signing multi-year contracts with Sandus. On the Arnings call recently, Sandus's management said they've already signed one major long-term agreement, and they have several more in the pipeline. And that's one reason why if some on Wall Street keep raising the price target of this company.

As of right now, 13 firms on Wall Street have a buy rating on the stock right now. But despite all the things that I just told you, not everyone is convinced that the memory industry has changed. In fact, they're also worried about a couple other things. So let's talk about the bear case. The surge that Sandus has seen in their stock price recently has been incredible. But the company still faces some major risks. The biggest risk here is history. You know, the memory market is famous for what economists call the hog cycle.

I've already referenced it a little bit, but what usually happens is that when prices go up, everyone rushes to build more supply, eventually too much supply hits the market, prices crash, and everyone loses money. In fact, that actually happened to the memory market in 2023. Now, Sandus says they've learned from their previous mistakes and they're going to be more strategic to not overbuild supply. But the bare case is that eventually more memory supply will hit the market, whether it's from Sandis or their competitors like Samsung or SK-Hinix or maybe from an up-and-coming company in China.

See, Nan Memory is pretty much like a commodity. There is minimal difference in the product regardless of who makes it. So one of Sandus' competitors could flood the market with supply, which would bring down the price of memory chips, impacting Sandus's bottom line and eventually hurting their stock price. So that's the risk on the supply side. The other risk is the demand side. That could also cool off. Now, Big Tag Giants are planning to spend like seven.

$700 billion on CAPEX in 2026, but what if they cut back on AI spending because investors start asking questions regarding the ROI? If AI demand starts to cool, that will impact Sandus's business and their growth moving forward. So what's my take here? Well, looking back, it makes sense on why Sandus's stock is skyrocketed over the last few months. Revenues are exploding, margins are expanding, and there seems to be no signs of a slowdown in demand from AI data centers. But the history of the memory industry and the boom and bust nature of it makes me nervous. You know, I know that Sandisk is shifting to longer-term contracts, which makes it safer than it used to be, but there still is real risk here. Now, I'm not as worried about the demand side.

I think we're going to see strong demand from AI data centers for the next couple of years. I'm more worried about the supply side catching up. So if you're looking at Sandys right now, you have to ask yourself, do you believe the supply shortage for memory chips will last until 2028. If you think the answer to that is yes, well, the stock could keep rallying. If on the other hand, you'd think that other memory makers will begin flooding the market with supply, well, then it gets pretty risky. Plus, there's also this psychological hurdle of buying a stock that's already gone up 1,600% because the last thing you want to do is be caught chasing a vertical line. Well, all right, guys, that's it for today's weekend, deep dive. Let me know in the comments,

your thoughts about Sandus? Do you think the stock is in a bubble, or is their business model also stayed in the long term and they have more room to run. Let me know what you guys think, and while you're at it, consider giving us a five-star rating on Spotify, YouTube, wherever you listen to your podcast, all of that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching, and commenting. Shout out to Mike and Connor for all the work behind the scenes.

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