SanDisk stock surged 8% on Tuesday, leading a broad rally in storage and memory shares. The company's year-to-date gain now stands at 87%, fueled by soaring demand for storage solutions. Other storage firms also advanced, with Western Digital rising 4.7% and Seagate climbing 2.6%.

The rally follows a major price target upgrade from Citigroup, which lifted its target for SanDisk to $490 from $280 while reaffirming a buy rating. Analysts point to robust data center capital expenditure, which is projected to hit $600 billion in 2026—a 50% year-over-year increase driven by AI infrastructure and hyperscaler spending.

While HDD manufacturers like Seagate and Western Digital are considered less volatile beneficiaries, the entire sector benefits from favorable supply-demand dynamics. Investors are also watching Western Digital, which is up 30% this year, as it prepares for a debt-equity exchange to reduce its leverage and improve its financial position.