Prediction: This Under-the-Radar Artificial Intelligence (AI) Stock Could Be a Multibagger by the End of 2026

For nearly three years, the story of artificial intelligence (AI) revolved around one crucial piece of hardware: the graphics processing unit (GPU). As hyperscalers accelerate the buildout of their data centers, investors are realizing that GPUs are just one layer in the AI ​​chip stack.

Memory chips and other data storage devices are an integral complement to GPU clusters, and demand for them has skyrocketed. As a result, shares of the flash memory specialist have risen over the past year Sandisk (SNDK +6.89%) have increased by more than 1,600%.

But based on the tailwinds driving Sandisk’s business, I think the stock’s rally is just beginning. In my opinion, it could easily generate more multibagger returns from here.

Why is memory important for AI models?

Throughout the AI ​​revolution, growth investors have focused primarily on two aspects of the AI ​​market: GPU designers such as Nvidia And Advanced micro devicesand cloud infrastructure providers such as Microsoft, AmazonAnd Alphabet.

Companies providing memory and data storage were largely undervalued because these products were considered commoditized. Rival companies’ offerings lacked much differentiation, and their sales prospects often depended on the upgrade cycles in the consumer electronics market. However, that narrative is starting to shift.

High-performance computing is not only supported by processing power. As AI models scale, major tech companies will need to make additional investments in their data centers’ ability to handle inference workloads — in other words, the processing tasks associated with using trained models to make predictions and decisions based on real-world data.

These workloads are incredibly memory intensive, as they require large amounts of data to be accessed quickly. As such, Sandisk’s fast NAND flash storage chips are becoming essential for AI servers.

Image source: Getty Images.

What is Sandisk’s addressable market?

The NAND flash memory market is expected to grow from approximately $59 billion in 2026 to $76 billion in 2031 – a compound annual growth rate of 5.3%. At first glance, this growth rate may not seem exciting. Consider, however, that during Sandisk’s second quarter of fiscal 2026 (which ended Jan. 2), 85% of the company’s revenue came from its consumer electronics segment and the edge segment (which makes memory for devices like PCs and smartphones). The subtle winner in the company’s latest earnings report was its data center division, which grew faster than the other business units at 64% quarter-over-quarter.

But with only $440 million in quarterly data center sales – compared to $2.6 billion for the edge and consumer electronics segments combined – Sandisk is clearly still in the early stages of penetrating the AI ​​data center market. Data center capabilities are positioned for explosive growth as demand for NAND flash storage accelerates.

Moreover, given the limited competitive dynamics in the memory space — Micron, SK HynixAnd Samsung are the other core players — Sandisk should be able to gain some level of pricing power as it continues to attract enterprise and hyperscaler customers.

SNDK EPS estimates for current fiscal year data according to YCharts.

Wall Street appears optimistic about Sandisk’s ability to maintain strong profit margins. The consensus among analysts is that profits will double over the next two years as the company rides the long-term tailwind of the AI ​​supercycle.

How Much Higher Can Sandisk Stock Go?

While Sandisk’s stock has been on a monster run, looking at the percentage gains alone doesn’t tell much about the company’s underlying valuation profile. It currently trades at a price-to-earnings (P/E) ratio of 15.5.

This is heavily discounted compared to other category-defining AI chip stocks. Nvidia, AMD and Broadcom have witnessed price-to-earnings ratios well above 40 during previous bull cycles in the AI ​​revolution.

That said, comparing Sandisk to those companies is a bit of an apples-to-oranges comparison. GPU and AI accelerator designers are more versatile, general players in generative AI development. Sandisk’s expertise in flash storage, while critical, is more of a niche market. Therefore, the company’s addressable market is not that large.

I think a more appropriate comparison for Sandisk is with the tech-heavy Nasdaq-100 index, which has a price-to-earnings ratio of about 24. If the market increases Sandisk’s valuation so that it trades in line with the index, it could be trading at almost $1,000 per share by the end of the year. This would represent a gain of more than 50% from the current price.

Given Wall Street is grossly underestimating hyperscalers’ planned capital expenditures for 2026, I think Sandisk is strategically positioned for higher-than-expected growth this year. The stock’s upside potential could be much higher than 50%.

With the company’s data center business ready for launch and the vast opportunity in NAND flash storage, Sandisk’s stock could feasibly double by 2026 if the company exceeds Wall Street expectations – which I think is highly likely.