SanDisk's stock pulled back following its earnings report, with Argus Research upgrading its rating to "Buy".

Storage chip maker SanDisk recently saw its stock price pull back after its earnings guidance missed expectations, but institutions believe AI-driven storage demand will underpin the company’s long-term growth. Argus Research analyst Jim Kelleher upgraded SanDisk’s rating from “Hold” to “Buy” and set a 12-month target price of $1,600. He explained that when his team initiated coverage in July, they were waiting for a better buying opportunity, and now that the stock has dropped sharply from its peak, the investment window has opened. SanDisk hit an all-time high of $2,335 on June 25 and has since declined, currently down roughly 47% from that peak. Last week, following the release of its quarterly results, the stock fell 6.8% in a single day as future performance guidance fell short of market expectations, with an additional 3.7% drop afterward. Kelleher holds that SanDisk is in the early stages of a multi-year cycle of accelerating revenue growth and expanding profit margins. As AI data center construction drives a surge in storage demand, major cloud computing firms including Amazon, Meta, and Alphabet (Google’s parent company) continue investing hundreds of billions of dollars in infrastructure, widening the supply-demand gap for storage components. He projects that the company’s profit margins will rise further, as its revenue growth significantly outpaces cost increases. To date, SanDisk’s stock has gained about 422% year-to-date and 2,757% over the past 12 months. Despite the recent sharp pullback, institutions believe the AI infrastructure investment cycle will provide new growth momentum for the company.