Sandisk's stock split takes effect on Nov. 19. Motley Fool analyst Keithen Drury argues that new customer agreements and a low valuation matter more for the shares than the split itself.
Sandisk shares are up nearly 300% so far in 2026, making the company the second-best-performing S&P 500 stock this year. The split takes effect on Nov. 19, but Drury writes in The Motley Fool that he sees other reasons to own the stock.
AI demand absorbs NAND supply
Sandisk makes NAND memory and the devices that use it, such as smartphones and solid-state drives. According to Drury, AI hyperscalers building out computing power have taken up nearly all NAND production capacity.
Because supply tightened, prices rose while Sandisk's input costs stayed the same. Drury says the company now earns a far larger profit on each unit, and that its gross and profit margins have both soared. The page lists a gross margin of 79.95%.
New agreements lock in volumes and pricing
Drury says Sandisk's customers often went with the cheapest option, bouncing between suppliers. Now they are keeping closer ties, and Sandisk has started to sign what it calls "New Business Model" agreements.
The agreements lock in committed volumes and structured pricing levels. Drury argues this gives Sandisk steadier cash flows, which could let it repurchase shares aggressively and reduce the cyclical downturns memory companies have historically seen.
Valuation looks low to the author
Drury points out that the shares trade at less than 4 times forward earnings. In his view, a large buyback would speed up earnings-per-share growth and push the shares higher through 2027.
Sandisk closed at $885.01 on Nov. 13, down 5.59% on the day. Drury writes that the stock is weak because of overall AI investment weakness, and he calls it a top investment option regardless of how it reacts to the split.
Source: The Motley Fool
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