Did you know that memory stock Sandisk (NASDAQ: SNDK) has been the top performer in the S&P 500 index this year, by a wide margin? Entering trading this week, it was up over 600% and far ahead of the next-best stock, Dell, whose gains are less than 300%. It's been a remarkable run for Sandisk as it has soared over 3,400% in just the past 12 months.
The company has grown significantly due to artificial intelligence (AI)-fueled demand for its memory and storage products. And for growth investors, there may be reason to remain bullish on the stock following the tech company's long-term forecast. This Rare Signal Is Flashing Again.
In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Sandisk recently held its Investor Day event, where it told the public that it expects its growth rate to be in the mid-to-high teens as it enters the next decade.
In addition, the company projects that its adjusted gross margins will also be at about 80%. This is great news, as it means demand won't fall off a cliff, as many investors may have feared, given the stock's pullback in recent weeks. While Sandisk has been doing tremendously well this year, it finished last week at around $1,600, down more than 30% from the highs it reached in June.
Many investors may have been worried about the company benefiting from just a short-term uptick in demand due to AI. But the recent guidance may have put some of those fears to rest as the stock has been rising sharply in recent days. For its current quarter, Sandisk projects that revenue will be between $10.3 billion and $10.8 billion, which would represent a year-over-year increase of 357% from the same period a year earlier.
A year ago, its growth rate was 23%. Sandisk's growth is exciting, but it is also proving to be highly volatile, and that can make the stock a bit of a risky buy because so much hinges on future growth expectations. For investors to buy the stock, they will need to be comfortable taking on risk and expecting volatility, because while Sandisk's stock has been hot over the past year, it has also demonstrated just how quickly its value can come crashing down.
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