JPMorgan Resumes Sandisk at Overweight, $2,250 Price Target

JPMorgan analyst Harlan Sur resumes coverage on SanDisk (NASDAQ: SNDK) with an Overweight rating and a price target of $2,250.

“Following a period of restriction on Sandisk (SNDK), we are moving to an OW rating (from Not Rated) and a December 2027 price target of $2,250 (~47% upside from current levels) coming out of the company’s 2026 Investor Day held in New York yesterday.

In our view, SNDK is in many respects uniquely positioned to capture the ongoing structural inflection in NAND demand driven by rapid growth in AI inference, with three key dynamics underpinning our OW thesis: 1) the New Business Model (NBM) framework (or LTAs – long-term agreements) has structurally reset SNDK’s margin profile higher and materially reduced cyclicality, with 8 signed NBMs representing ~$94B in total contract value at floor pricing, weighted-average contract duration of 4+ years, and ~80% GM even at the floor pricing tier;

2) NAND market TAM is inflecting from ~$70B in CY25 (JPMe) to $300B+ in CY26 and ~$500B in CY27, with Data Center representing the largest driver of growth (by far) as hyperscale/cloud customers increasingly deploy flash for inference-era workloads (incl. persistent KV cache – a major driver of bit demand growth); and

3) SNDK is delivering technology leadership, with BiCS10 sampling ahead of schedule (332-layer 2Tb QLC with 65% more bits per wafer than BiCS8), a projected 27% CAGR in per-wafer bit productivity through BiCS generations, and High Bandwidth Flash (HBF) emerging as a differentiated inference-era memory platform.

Mgmt introduced a long-term financial model for FY28-FY30 targeting mid-/high-teens% revenue growth (in-line with bit growth – implying ~flat pricing was conservatively assumed), ~80% GM, ~75% OpM, and ~50% adjusted FCF margin, representing a clear step-change from historical norms where GMs oscillated well below this level.

To us this screens as a substantive reset rather than peak-cycle pricing capture, with NBMs accounting for >50% of FY27 bits and growing to ~2/3 in FY28, and contracts detailing month by-month volume, mix, and price commitments backed by $16.5B in financial guarantees, significantly improving forward visibility from the “three months of pricing visibility” that has been “standard operating procedure” for the industry, to 4+ years of committed economics with strategic customers.

Even at floor pricing, we think NBMs sustain ~80% GMs across the multi-year contract lives, with upside captured through variable pricing mechanisms. We also view the LT financial model as embedding meaningful earnings leverage that we think is not fully captured in current consensus estimates as mid-/high-teens% revenue growth ultimately translates into an EPS growth CAGR north of 25%.

Layered on top, mgmt’s commitment to returning 100% of excess cash flow to shareholders should drive an aggressive share count reduction trajectory that further amplifies EPS growth on a per-share basis.”

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