SK Hynix Has Fantastic News for Memory Stocks. Time to Buy Sandisk Before It Skyrockets on Aug. 5

SK Hynix is one of the most important memory manufacturers in the world. It enjoys a healthy market share in the dynamic random-access memory (DRAM) and NAND flash markets, which is why the CEO's latest comments suggest the memory supercycle is here to stay.

The South Korean bellwether's CEO, Kwak Noh-Jung, recently told Reuters in an interview that he expects the memory shortage to worsen in 2027. What's more, he added that memory demand will continue to outstrip supply beyond 2030, despite the company's efforts to aggressively add capacity. All this bodes well for Sandisk (NASDAQ: SNDK), one of the hottest names in the memory industry that has made investors significantly richer over the past year.

Sandisk is going to release its fiscal 2026 fourth-quarter results on Aug. 5. SK Hynix's comments about the state of the memory industry suggest that Sandisk could go on a parabolic run after its upcoming report. Let's see why.

Sandisk's numbers and guidance could crush consensus expectations

Sandisk is a pure-play NAND flash storage company. It controls 13% of this market, according to Counterpoint Research. SK Hynix is bigger than Sandisk in NAND flash with an 18% market share. So, when SK Hynix notes that the memory shortage is set to worsen in 2027, one can assume that the massive price hikes powering Sandisk's growth are here to stay.

The NAND flash industry's revenue increased 3.5x year over year in Q1 to $46 billion. Analysts are anticipating Sandisk's fiscal Q4 revenue to increase by 338% year over year to $8.34 billion. The bottom-line jump will be even more impressive at a whopping 117x to $34.15 per share. If SK Hynix's forecast about the memory supply situation getting worse turns into reality, then there is a solid chance of Sandisk's numbers exceeding expectations.

After all, the consensus earnings estimate for fiscal Q4 isn't very far from the higher end of Sandisk's earnings per share guidance of $33.00. The company has been striking long-term agreements with customers that include a variable pricing option, which will allow it to capture potential price increments in NAND flash. This should pave the way for stronger-than-expected guidance, given SK Hynix's forecast that the supply situation will tighten.

The stock still has multibagger potential

This semiconductor stock has turned a $1,000 investment into $33,000 over the past year. You may be wondering if it can deliver more upside following such stunning gains.

Given that Sandisk is trading at just 21 times forward earnings and is expected to clock a 220% increase in earnings per share in fiscal 2027 to $212.60, it can indeed fly higher. Sandisk can easily achieve such terrific earnings growth in the current fiscal year since NAND flash demand will continue to overwhelm supply.

This AI stock could easily trade above $4,000 even if it trades at 20 times earnings after a year, based on its earnings-per-share estimate for the fiscal year that has just begun. That's nearly triple Sandisk's current stock price, which means that it isn't too late for investors to buy this AI stock.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.