Jan 30 (Reuters) – Sandisk shares rose on Friday after the data storage company forecast third-quarter profit and revenue well above analysts’ forecasts and extended a major supply agreement amid a surge in demand for data storage driven by artificial intelligence.
Its shares were last up 14.7% at $616.5, building on a roughly 160% gain in January, making it one of the best-performing stocks in the S&P 500.
The company expects fiscal third-quarter revenue of $4.4 billion to $4.8 billion and adjusted profit of $12 to $14 per share. The midpoints 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 points this appears likely to persist beyond a year – and will remain so as long as the AI ​​trajectory remains this strong,” Morgan Stanley analysts said in a note.
Rivals Western Digital, Seagate Technology and industry giant Micron Technology have also posted strong growth recently, with the memory chip maker emerging as the winner in the artificial intelligence race so far.
Western Digital also forecast third-quarter revenue to beat expectations, but its shares fell 5.5%.
As memory chips face a severe shortage worldwide, artificial intelligence and consumer electronics companies are competing for dwindling supplies, a squeeze expected to support manufacturers’ backlogs for years.
Morningstar analysts expect supply constraints to last at least until 2028, which could lead to significant growth for Sandisk.
The company reported second-quarter sales of $3.03 billion and adjusted profit of $6.2 per share, both exceeding expectations.
Sandisk has secured supplies of flash memory chips through a joint venture with Japan’s Kioxia Corp, and the two companies said they had extended the supply agreement to the end of 2034 from its previous expiration of late 2029.
At least five brokerages raised their price targets on the stock, including Bernstein’s $1,000 target, the highest on Wall Street.
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Shilpi Majumdar)
