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The S&P 500 might be little changed so far in 2026, but certain companies within the index are already doing either very well or very badly. One stock is leading the charge, up 157% already this year. It’s capturing a lot of investors’ attention, with some seeing it as a no-brainer purchase right now. But is it really that simple?
A hyper-growth firm
I’m referring to SanDisk Corp (NASDAQ:SNDK). It’s a US tech company focused on flash memory storage solutions. On the face of it, that might not sound that exciting (or relevant). However, its products and solutions are widely used in AI infrastructure and data centres, as well as with enterprise and cloud storage clients. Given the huge growth in these areas at the moment, the penny is starting to drop as to why SanDisk is doing so well right now.
Investors are factoring in massive demand for data storage driven by AI training and inference workloads. The massive datasets involved require high-speed flash storage. Right now, there is an industry-wide shortage of certain products, which has supported higher pricing and stronger margins, as SanDisk becomes a power player.
Financial results drive gains
It’s not just speculation regarding AI demand. At the end of last month, the US stock rocketed 25% higher on the day it released the latest quarterly results. It posted a profit of $803m, up from $104m a year earlier. That goes some way to show the explosive growth the company is experiencing.
The CFO said at the time that the company still cannot keep up with the demand. This highlights to me that there is scope for further growth in revenue and profit this year and beyond as it scales up.
Taking a breather
Over the past year, the stock is up 1,500%. It is now in the S&P 500, with the publicity recently another factor helping to drive momentum. I can see why some feel it is a no-brainer buy, given its role in the AI theme. If AI adoption continues to increase, SanDisk is well-positioned to profit from it. Even with the rise, the $85bn market cap is still relatively small compared to other tech stocks.
However, there are risks involved. For a start, the stock price has appreciated dramatically. This could mean much of the future growth may already be taken for granted. If growth slows, the stock could retrace sharply, given the high benchmark now set. Furthermore, the company has a heavy reliance on Asian supply chains and joint ventures. This introduces a host of risks including geopolitical tensions and production disruption.
I cannot call it a complete no-brainer, because there are factors outside of all of our controls that could mean the stock underperforms this year. But even with the concerns, I do think it’s one of the best S&P 500 stocks to consider buying right now.
