Sandisk Corp. (SNDK) got a big thumbs-up from JPMorgan on Friday, and the reasoning goes far beyond "AI is hot." The bank's analyst, Harlan Sur, upgraded the memory chip maker to Overweight from Not Rated after the company's 2026 Investor Day, slapping a December 2027 price target of $2,250 on the stock. That's about 47% above where shares closed on Aug. 13 at $1,528.11.

The bull case isn't just about demand, though that's certainly part of it. It's about a fundamental shift in how Sandisk does business, one that could finally break the memory industry's notorious boom-bust cycle.

AI Could Supercharge NAND Demand

Let's start with the demand side. JPMorgan sees the NAND flash market ballooning from roughly $70 billion in 2025 to more than $300 billion in 2026. Sandisk itself expects the market to approach $500 billion by 2027. Data centers, which accounted for about 30% of the market in 2025, are projected to make up half of it in 2026.

What's driving this? AI inference, which is surprisingly storage-hungry. Larger models, longer context windows, and agentic AI applications all need data stored and retrieved at lightning speed. JPMorgan specifically points to persistent key-value cache as an emerging source of NAND demand. That's the kind of technical detail that makes you realize this isn't just hype.

On the supply side, things look pretty tight. Industry wafer capacity is still about 30% below its previous peak, and utilization is near 100%. That combination could keep NAND prices firm and extend the current upcycle, according to JPMorgan.

$94 Billion In Deals Could Reduce Boom-Bust Cycles

Here's where it gets interesting. Sandisk has signed eight long-term agreements with major customers, totaling about $94 billion in contract value at floor pricing. These contracts have a weighted-average duration of more than four years and include $16.5 billion in financial guarantees. JPMorgan estimates that even at floor pricing, gross margins could stay around 80%.

This is a big deal. Historically, memory companies have been at the mercy of spot prices, which swing wildly with supply and demand. But with these long-term agreements, Sandisk is locking in committed economics for years. The contracts are expected to cover more than half of Sandisk's bits in fiscal 2027 and roughly two-thirds in fiscal 2028. That means a huge chunk of the business is moving away from volatile spot-priced flash toward stable, high-margin revenue.

Sur sees this as a potential break from the boom-bust cycle, replacing short-term pricing visibility with more than four years of committed economics. It's a bold claim, but the numbers back it up.

JPMorgan Sees EPS Growth Above 25%

Sandisk's long-term financial model is pretty ambitious. The company targets mid- to high-teens percentage revenue growth from fiscal 2028 through fiscal 2030, with an adjusted gross margin of about 80%, an operating margin of roughly 75%, and an adjusted free cash flow margin near 50%.

JPMorgan thinks that revenue growth will translate into an EPS compound annual growth rate above 25%. The firm also likes Sandisk's plan to return 100% of excess cash flow to shareholders, which should reduce the share count and give per-share earnings an extra boost.

Sur forecasts calendar 2027 EPS of $250. His $2,250 price target applies a nine-times multiple to that estimate, which sits comfortably within the historical seven-to-10-times forward earnings range for memory stocks.

Next-Generation Flash Adds Another AI Catalyst

There's also the technology angle. Sandisk's BiCS10 chip is sampling ahead of schedule and packs 65% more bits per wafer than its predecessor, BiCS8. JPMorgan expects Sandisk to achieve a 27% compound annual growth rate in per-wafer bit productivity across several BiCS generations.

And then there's High Bandwidth Flash, or HBF, which is being developed specifically for AI inference workloads. The first HBF memory die has been taped out, with initial inference product samples targeted for 2027.

Put it all together, and JPMorgan sees a multiyear compounding earnings story: stronger through-cycle profitability, sustained AI-driven bit demand, and share reductions. That's a powerful combination.

Price Action

SNDK Price Action: Sandisk shares were up 7.41% at $1,641.31 at the time of publication on Friday, according to market data.