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Investing.com -- J.P. Morgan moved SanDisk to Overweight from Not Rated with a December 2027 price target of $2,250, citing positive takeaways from the company’s 2026 Investor Day held in New York.
Shares in the flash memory and data storage giant rose more than 6% in premarket trading Friday.
Analyst Harlan Sur said SanDisk is "uniquely positioned to capture the ongoing structural inflection in NAND demand driven by rapid growth in AI inference," pointing to three key dynamics behind the upgrade.
The first is SanDisk’s "New Business Model" (NBM) framework, or long-term agreements, which Sur said has "structurally reset SNDK’s margin profile higher and materially reduced cyclicality." The company has signed eight NBMs representing roughly $94 billion in total contract value at floor pricing, with a weighted-average duration of more than four years and gross margins around 80% even at the floor pricing tier.
NBM share of the company’s bits is expected to grow from over 50% in fiscal 2027 to about two-thirds in fiscal 2028, backed by $16.5 billion in financial guarantees.
The second driver is the NAND market’s total addressable market, which Sur expects to inflect from roughly $70 billion in calendar 2025 to more than $300 billion in 2026 and approximately $500 billion in 2027. Data center demand is the largest contributor, as hyperscale and cloud customers increasingly deploy flash memory for AI inference workloads, including persistent KV cache.
Third, the analyst cited SanDisk’s technology roadmap, noting BiCS10 is "sampling ahead of schedule" with 332-layer 2Tb QLC architecture delivering 65% more bits per wafer than its predecessor. He also pointed to High Bandwidth Flash as "a differentiated inference-era memory platform."
SanDisk introduced a long-term financial model for fiscal 2028-2030 targeting mid-to-high-teens percentage revenue growth, roughly 80% gross margin, about 75% operating margin, and around 50% adjusted free cash flow margin. Sur called this "a clear step-change from historical norms," and said the model "screens as a substantive reset rather than peak-cycle pricing capture."
The long-term model embeds earnings leverage not fully captured in consensus estimates, with revenue growth translating into an EPS growth CAGR north of 25%, he noted. Combined with management’s commitment to returning 100% of excess cash flow to shareholders, Sur said this "sets up a compounding earnings power dynamic" supporting its calendar 2027 EPS estimate of $250.
