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Why Sandisk Stock Rallied Today
Key Points
Sandisk stock gained after competitor SK Hynix delivered record growth.
Its outlook made it clear that the unprecedented demand for memory chips will continue through 2030.
The stock remains attractively priced.
Shares of Sandisk (NASDAQ:SNDK) charged sharply higher on Wednesday, jumping as much as 6.4%. As of 12:27 p.m. ET, the stock was still up 5.9%.
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The catalyst that sent the semiconductor specialist higher was a competitor's bullish financial report.
Image source: Getty Images.
Show me the money
Korean memory chipmaker SK Hynix (NASDAQ:SKHY) -- one of Sandisk's key rivals in the artificial intelligence (AI) chip space -- reported the results of its fiscal 2026 third quarter, and the results wowed investors. It reported record revenue that surged 328% year over year and 32% quarter over quarter to 104.6 trillion South Korean Won (roughly $78.9 billion). Operating profits were equally robust, soaring 632% year over year and 38% sequentially to 83.3 trillion won (roughly $61.7 billion).
To give the results perspective, analysts' consensus estimates were for revenue of 98.34 trillion won and operating profit of about 76.7 trillion won, so the results cleared both bars with ease.
The headline, however, was management's commentary about supply and demand for AI memory chips. "Demand [is] expected to outpace supply through 2030." Recent predictions suggested that demand for memory chips would peak before 2028, so this outlook is bullish for the industry.
Sandisk is one of the Big Three computer memory manufacturers, so it will profit from the supply and demand imbalance for memory chips -- which are critical to the ongoing adoption of artificial intelligence (AI).
Despite stock price gains of more than 650% over the past year, Sandisk is selling for just 19 times earnings, a valuation that is all the more meaningful since the company continues to grow at a triple-digit rate. Moreover, SK Hynix's commentary suggests the ongoing AI-related demand will continue through the end of the decade, which will benefit Sandisk shareholders.
That's why Sandisk stock is still a buy.
Danny Vena, CPA has positions in Sandisk. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.