Citi raises Sandisk target price to US$2,025 and reiterates Buy

Overview

In this report, Citi reiterates its Buy rating on Sandisk Corp and raises the target price to US$2,025. The key reasons are strong hyperscaler eSSD demand driven by AI training and inference, still-tight NAND industry supply, a clear upward ASP trend, and Sandisk's long-term agreements and improving data center product mix, which are expected to enhance earnings quality.

Core views

The core view of the report is that Sandisk is in a favorable storage cycle: on the demand side, AI, data centers, and high-performance inference products are driving growth; on the supply side, limited cleanroom capacity and supplier discipline are constraining supply; and on the pricing side, conditions are likely to continue improving. Kioxia's strong performance and guidance are viewed as validation of industry strength; Sandisk's long-term JV with Kioxia, rising enterprise SSD share, Bics8 qualification, and long-term agreement structure together support a higher valuation.

Analysis framework

Citi analyzes Kioxia's quarterly results, NAND ASP forecasts, Sandisk's earnings model, long-term agreement terms, the potential impact of buybacks, and peer valuations. The target price is based on a P/E valuation of CY27E EPS, assigning Sandisk a 9-10x multiple, above Kioxia and the broader peer group, because Sandisk's long-term agreement structure and data center exposure provide stronger earnings visibility.

Methodology notes

• Relative valuationCY27E P/E valuation

  Deriving the target price using a 9-10x CY27E EPS multiple

  Citi sets Sandisk's target price at US$2,025 using a 9-10x CY27E P/E multiple; compared with about 7x for Kioxia and about 6-7x for the broader peer group, Sandisk earns a premium due to its long-term agreements and earnings visibility.

• Industry supply-demand analysisNAND supply-demand and ASP upcycle framework

  Tight supply, AI demand, and ASP increases jointly drive earnings upgrades

  Based on Kioxia's results, management guidance, and forecasts from Citi's storage team, the report believes NAND demand will continue to exceed supply through CY27, while CY26 NAND ASP and eSSD ASP will rise significantly.

• Short-term catalystCiti STV

  90-day short-term bullish view

  Citi assigns Sandisk a short-term bullish view expiring on 2026-06-17, with catalysts including industry earnings, pricing commentary, enterprise SSD demand, and upward earnings revisions.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Sandisk Corp (SNDK.O)

  Core covered name

  Strengths

  Benefits from AI-related eSSD demand, rising enterprise SSD share, Kioxia JV supply support, long-term agreements, and strong brand/IP assets.

  Weaknesses

  Lacks DRAM exposure, business is highly exposed to the NAND cycle, and enterprise share gains still require execution validation.

  Comparison

  Citi assigns Sandisk a higher P/E multiple than Kioxia and the broader peer group, believing its long-term agreements and data center exposure provide greater earnings visibility.

  Risks

  A reversal in supply-demand balance, price competition, macro weakness, slower data center spending, and competition from Chinese manufacturers could compress margins.

• Kioxia Holdings (285A.T)

  Industry validation and JV partner

  Strengths

  Strong quarterly revenue, operating profit, and next-quarter guidance, with clear NAND ASP increases; management expects demand to exceed supply through CY27.

  Weaknesses

  As a pure-play NAND manufacturer, earnings and share price volatility are high, with limited free float and a high ownership concentration among major shareholders.

  Comparison

  Kioxia's valuation is used as a peer reference for Sandisk; the report believes Sandisk's long-term agreement structure supports a higher multiple.

  Risks

  Changes in semiconductor equipment export restrictions, industry capacity expansion, inventory adjustments in smartphones and data centers, and yen appreciation could affect profitability.

Key data

• Target priceUS$2,025.00Raised from US$1,300.00, based on 9-10x CY27E P/E.
• Current priceUS$1,333.01Price as of 2026-05-18 16:00.
• Expected total return51.9%Expected share price return of 51.9%, dividend yield 0.0%.
• Market capitalizationUS$197,405MSandisk market capitalization disclosed in the report.
• Kioxia quarterly revenue¥1.003TAbove guidance of ¥845-935B and FactSet's ¥923.66B, with revenue up about 85% QoQ and about 190% YoY.
• Kioxia operating margin for the reporting periodnearly 60%Driven by NAND demand and ASP more than doubling QoQ.
• Kioxia next-quarter guidanceRevenue ¥1.750T; non-GAAP operating profit ¥1.300T; operating margin 74%Guidance is significantly above FactSet, reflecting ASP increases across all applications.
• NAND ASP forecastCY26 +186%yy；eSSD +265%yyCiti's Korea storage analyst expects global storage prices to remain on an upward trend in 2H26E.
• Buyback authorizationUS$6bnEquivalent to about 3% of current market cap; the model indicates that each roughly 1% reduction in share count could add about US$2 of EPS upside.

Impact & implications

If the report's thesis plays out, Sandisk will benefit from expanding enterprise SSD and data center demand, a sharp rise in NAND ASPs, reduced cyclical volatility through long-term agreements, and EPS accretion from buybacks. For investors, the report positions Sandisk as a high-beta beneficiary of the AI storage cycle, while also warning that storage industry supply, demand, and pricing are highly cyclical.

Risks

• Sandisk's progress in increasing enterprise SSD share may be slower than expected.
• A deterioration in the macro environment could hit data center capex, the PC replacement cycle, or AI-PC demand.
• Supply-demand imbalance or price competition could lead to sharp fluctuations in NAND pricing and compress margins.
• If Chinese manufacturers continue aggressively competing for market share, pricing pressure may intensify.
• If idle industry capacity is released quickly, the current favorable pricing conditions could reverse rapidly.

What to watch

• Whether NAND demand in CY26-CY27 continues to exceed supply.
• Whether eSSD and data center demand continue to show strong growth.
• Progress in Sandisk's enterprise customer wins, Bics8 qualification, and product mix improvement.
• Actual execution of long-term agreements in terms of volume, floor-price protection, gross margin structure, and financial safeguards.
• The pace of execution of the US$6bn buyback authorization and its EPS accretion impact.
• Kioxia's subsequent results, ASP guidance, and commentary on industry supply and demand.
• Changes in macro data center spending, PC replacement, and AI-PC demand.