Jan 30 (Reuters) – Sandisk shares rebounded on Friday, after the data storage company forecast third-quarter profit and revenue well above analyst estimates and extended a major supply deal, fueled by an AI-driven surge in demand for data storage.
Its shares were last up 14.7% at $616.5, building on their roughly 160% jump in January that made it one of the S&P 500’s best-performing stocks.
The company expects third-quarter revenue of $4.4 billion to $4.8 billion and adjusted earnings of $12 to $14 per share. The midpoints of both were above estimates of $2.77 billion and $4.37 per share, respectively, according to data compiled by LSEG.
“Earnings are above the long-term trend, but based on our data, it seems likely that they will remain so for more than a year – in fact for as long as AI’s trajectory remains this robust,” Morgan Stanley analysts said in a note.
Rivals Western Digital, Seagate Technology and industry giant Micron Technology have also posted robust gains of late, with memory chip makers among the winners in the AI race so far.
Western Digital also forecast third-quarter revenue above expectations, even though its shares were down 5.5%.
As memory chips face a severe shortage globally, AI and consumer electronics companies are competing for dwindling supplies, a squeeze that is expected to cause a years-long delay for manufacturers.
Morningstar analysts expect supply constraints to persist at least through 2028, which could generate significant growth for Sandisk.
The company reported second-quarter revenue of $3.03 billion and adjusted earnings of $6.2 per share, both beating estimates.
Sandisk secured its supply of flash chips through a joint venture with Japan’s Kioxia Corp and the companies said they had extended their supply agreement until the end of 2034, following its previous expiration at the end of 2029.
At least five brokerages raised their price targets on the stock, with Bernstein’s call of $1,000 among the highest on Wall Street.
(Reporting by Shashwat Chauhan in Bangalore; Editing by Shilpi Majumdar)