Prediction: This will be Sandisk’s stock price after 1 year

Artificial intelligence (AI) stocks are witnessing a bloodbath in the market for a variety of reasons, including higher-than-expected inflation, higher interest rates, concerns over access to financing amid higher capital costs, and aggressive spending on AI infrastructure by hyperscalers that is hurting their cash flow.

Actions of Sandisk (SNDK -2.66%) were caught in the broader tech rout, and a report on the company’s strong earnings didn’t help it stop the slide. Let’s take a closer look at Sandisk’s results and check whether its fortunes will improve in the coming year.

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Sandisk’s latest results indicate its meteoric growth is here to stay

Sandisk released its results for the first quarter of fiscal 2027 (for the three months ended October 2) on October 29. The stock plunged more than 13% the next day amid a massive sell-off in technology stocks. However, Sandisk’s decline is not justified when taking a closer look at its earnings and guidance.

Sandisk’s revenue jumped 378% year over year to $11.03 billion. At the same time, non-GAAP earnings per share (EPS) rose from just $1.22 last year to $49.51 the previous quarter. The figures far exceeded Wall Street’s expectations. Better yet, Sandisk’s forecast for the current quarter is better than what analysts were looking for.

The company expects revenue of $12.4 billion for the current quarter, midway through its guidance range. It expects earnings per share of $56.00. Analysts had expected earnings per share of $54.69 on revenue of $12.29 billion. Additionally, Sandisk’s outlook clearly suggests that its meteoric growth is sustainable.

The company reported revenue of $3 billion and non-GAAP earnings per share of $6.20 in the second quarter of fiscal 2026. So, its top and bottom lines are once again poised for an exponential jump. It’s worth noting that Sandisk’s revenue grew at a much slower pace, 61%, during the same quarter last year, while profits grew 5x year over year.

So Sandisk’s growth continues to accelerate, which is why analysts expect its net income to increase 220% in fiscal 2027 to $226.85. However, Sandisk’s first-quarter EPS growth and guidance for the second quarter indicate that it could exceed analyst expectations, which could set the stock up for significant gains in the year ahead.

Wall Street expects big gains from Sandisk, but it could do better

Sandisk’s 12-month median price target of $2,167 implies gains of 88%, which is pretty healthy. However, the astonishing profit growth recorded by the company indicates that it can do better than that.

I say this because of the very cheap valuation of the stock. Sandisk trades at just 9 times earnings, well below S&P500 index profits increase 23 times. Average S&P 500 profits are expected to increase 33% this year. Sandisk therefore deserves to trade at a premium to the S&P 500.

Let’s say the stock trades at even 15 times earnings at the end of fiscal 2027, which ends in early July next year, and it posts EPS of $226.85 (in line with consensus expectations); its price could reach $3,403. This is currently almost 3 times the price of Sandisk, indicating that it has the potential to become a multibagger given its meteoric growth and attractive valuation.