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J.P. Morgan upgraded SanDisk to Overweight from Not Rated and set a December 2027 price target of $2,250, citing stronger long-term growth prospects following the flash memory company's 2026 Investor Day in New York.
SanDisk shares climbed more than 6% in premarket trading Friday following the bullish call. J.P. Morgan analyst Harlan Sur said SanDisk is well positioned to benefit from a structural shift in NAND demand as artificial intelligence inference workloads drive greater adoption of flash memory.
A major factor behind the upgrade is SanDisk's New Business Model (NBM), which uses long-term customer agreements to improve margins and reduce exposure to traditional NAND market cycles. SanDisk has secured eight agreements representing approximately $94 billion in total contract value at floor pricing. The contracts have a weighted-average duration exceeding four years and could generate gross margins of roughly 80% even at floor prices.
NBMs are expected to represent more than 50% of SanDisk's bits in fiscal 2027 and approximately two-thirds in fiscal 2028, supported by $16.5 billion in financial guarantees.
J.P. Morgan also expects the NAND market to expand dramatically, from roughly $70 billion in 2025 to more than $300 billion in 2026 and about $500 billion in 2027. Data center demand is expected to lead that growth as hyperscalers and cloud providers deploy more flash storage for AI inference and persistent KV cache workloads.
SanDisk's technology roadmap provides another catalyst. Its BiCS10 platform is sampling ahead of schedule, while its 332-layer 2Tb QLC architecture delivers 65% more bits per wafer than the previous generation. Sur also highlighted High Bandwidth Flash as a differentiated memory technology for AI inference.
For fiscal 2028-2030, SanDisk is targeting mid-to-high-teens revenue growth, approximately 80% gross margins, 75% operating margins and a 50% adjusted free cash flow margin.
J.P. Morgan believes these targets could support an EPS compound annual growth rate above 25%. Combined with SanDisk's plan to return 100% of excess cash flow to shareholders, the firm expects stronger earnings power and forecasts calendar 2027 EPS of approximately $250.
