Inside Sandisk’s transformation from thumb drive dinosaur to the hottest trade in AI

Pretty much nobody saw it coming.

Five months and nearly a 1,000% return later, it’s one of the craziest comeback stories on Wall Street, with Sandisk, a stodgy old memory card company, vaulting to the top of the S&P 500 and squarely into the center of the AI trade.

Last August, memory chip analysts, vendors, researchers, and consultants gathered in Santa Clara, California, for their big annual conference. Mark Webb, a 20-year veteran of Intel, said most at the event had a similar outlook: things would likely slow down in the winter, then there’d be a return to growth in 2026.

“I don’t think there was any disagreement,” Webb recalled. “Then in September, everything started skyrocketing.”

The subsequent run on chips put Sandisk — a company you might remember from the early 2000s as a maker of things like USB thumb drives and memory cards — at the heart of the hottest trade on Wall Street.

In recent months, rising AI usage by companies and consumers has generated so much data, it’s prompted a rapid market reassessment of the amount of memory chips and storage devices needed to manage it.

The result: market momentum is now centering on makers of memory chips, such as Micron, and data storage products that use those chips, like Sandisk.

As one insider put it: “I would say memory is the future of AI, because if there is no memory, there’s no AI.”

And heavyweights like Nvidia CEO Jensen Huang agree, noting that current memory solutions are “the bottleneck” of AI.

Even as memory-related stocks worldwide spiked, Sandisk was an outlier, as you can see in this chart. Analysts say there are a couple reasons for Sandisk’s outperformance, including its built-in cost advantage.

The Takeaway

Industry insiders didn’t expect it. One of the smartest hedge funds on Wall Street didn’t see it coming. Even Sandisk itself, which has existed as a stand-alone stock for less than a year, seemed surprised.

The company’s January 29 earnings report will be a key event for traders, and analysts have penciled in some lofty expectations for the hottest stock of 2025 to live up to in 2026. Whatever the results, Sandisk certainly is having a memorable first year on the market.