Raymond James has upgraded Sandisk to Outperform, setting a $725 price target amid a tightening NAND supply. The upgrade comes as the data center and AI-driven storage cycle distorts traditional forecasting models. Demand remains robust, and supply constraints are expected to persist, potentially selling out capacity for years. This shift favors Sandisk's position.

The firm anticipates Sandisk's revenue to be approximately 57% higher than consensus, with earnings more than doubling expectations. Data center revenue jumped 64% quarter-over-quarter, now accounting for 15% of total sales. Management expects continued growth, driven by additional hyperscale and data center clients. Pricing is described as exceptionally strong.

Raymond James projects fiscal 2026 earnings of $41.06, driven by continued data center momentum and nearly doubled year-ago margins. The $725 target is based on an 8.4x multiple of projected fiscal 2027 non-GAAP earnings. Further earnings revisions are anticipated as investors gain clarity on supply and pricing dynamics.

The upgrade reflects the growing importance of data storage and the impact of supply chain issues. As demand for AI and cloud computing surges, the need for NAND flash memory will likely increase. This positive outlook for Sandisk suggests investors should pay attention to the ongoing dynamics within the semiconductor industry.