Key Facts

Key Background

Data storage companies have become one of the most important players in the massive AI data center buildout by providing critical hardware needed for AI models to run. AI models will retrieve data—such as text, images and video—stored in hardware such as SanDisk’s flash drives to create its outputs, as well as store any outputs it creates on these drives for future reference. The race to build the most powerful AI models has created an unprecedented need for storage thanks to the sheer volume of data needed to train and run a sophisticated AI model. Particularly, SanDisk specializes in flash memory that provides instantly accessible “hot” storage, which these models can retrieve data from immediately as they run, as opposed to “cold” storage products, which store data that these models do not need constant, immediate access to. Research firm Gartner expects data center spending will surpass $650 billion in 2026, up 31.7% from nearly $500 billion the previous year.

Crucial Quote

In early January, Nvidia CEO Jensen Huang called AI data storage a "completely unserved market,” saying: "This is a market that never existed, and this market will likely be the largest storage market in the world, basically holding the working memory of the world's AIs." Sandisk stock jumped 28% in a single day following Huang’s speech.

Big Number

$135 billion. That’s SanDisk’s current market cap. One year ago, the company’s market cap was around $5.5 billion.

Tangent

SanDisk was spun out of data storage company Western Digital in February 2025, after the company determined that it needed to separate the hard drive business, which provides “cold” storage, from its flash drive business because they operated on different business needs. The decision came at a time when the company was trying to recover from a difficult period. Just two years ago, Western Digital and the larger data storage industry were largely unprofitable because of the pandemic and companies over-buying during the cloud computing data center buildout, Cantor Fitzgerald analyst CJ Muse told Forbes. But with demand for storage skyrocketing thanks to AI, the situation has completely flipped. Companies like SanDisk are now tight on supply as large tech companies demand massive amounts of storage as quickly as possible to fill their data centers. That gives data storage companies the power to increase prices—SanDisk has raised price per bit by over 100% in the last year. “Starting in August 2025, SanDisk’s stock started to rip as demand led by AI really took off,” Muse said. “We're still in an excellent tight supply environment, which I believe is going to be tight for all of 2026 and at least half of 2027.” For the quarter ending December 2025, SanDisk reported $3 billion revenue, up 31% from the previous quarter and up 61% year-over-year, and net income of $803 million, up 617% from the previous quarter and up 672% year-over-year.

What To Watch For

SanDisk will be reporting earnings for the quarter ending in March on April 30. While investor optimism is high as it seems AI demand is not going away anytime soon, some worry that such a huge surge in demand from AI is not sustainable for the industry and will only reiterate the narrative that the data storage industry is highly cyclical with very harsh downturns after spikes in demand for storage products—for instance, during the smartphone era in the 2000s and the cloud computing boom in the 2010s. Investors will be watching whether these data storage companies will be able to sustain this growth instead of facing another oversupply situation that crushed the industry just a few years ago. “We doubt that "this time is different”,” wrote Morningstar analyst William Kerwin. “We believe SanDisk is prone to market-driven cyclicality in memory chips and doesn’t hold pricing power over its customers.”