Can Sandisk Stock Turn a $10,000 Investment Into $1 Million?

Sandisk (SNDK 5.30%) has generated some incredible returns for investors, soaring by more than 3,000% in the past year. Demand for memory products has been skyrocketing, and Sandisk’s numbers have taken off, making it one of the hottest buys in tech of late. Today, its market cap is around $190 billion. It is now worth more than the company it spun out from a little over a year ago — Western Digital (its market cap is roughly $155 billion).

And with reports that the shortage in memory products isn’t ending anytime soon, there may be even more upside for Sandisk’s stock. Although it has already produced some fantastic returns, does it have the potential to turn a $10,000 investment into $1 million, over the long term?

Memory shortage could continue to give Sandisk stock plenty of room to run

A big reason why Sandisk’s been able to generate terrific growth is due to rising prices for memory products. In addition to selling more products, it is also able to sell them at higher prices due to soaring demand. As a result, the company’s sales and profits have looked astounding.

In its most recent quarter, which ended on April 3, Sandisk’s revenue rose by 251% year over year, to nearly $6 billion. What was even more impressive was that its operating income was $4.1 billion — that’s an incredible margin of 69%. That’s a far cry from a year ago, when it was in the red due to goodwill impairment charges.

Analysts project a memory shortage could extend beyond 2028, and even into 2030. If that’s the case, Sandisk may continue to generate robust growth and profits along the way. That outlook explains why, while the stock has come a long way in just 12 months, it’s still only trading at 24 times its estimated future earnings (which are based on analyst estimates).

Sandisk may have more upside, but investors should temper expectations

Sandisk’s stock has run extremely hot over the past 12 months, and expecting even more of a surge in value may be optimistic, to put it lightly. For it to grow to 100 times its current value (which is what would be necessary for a $10k investment to turn into $1 million), that would put its market cap at more than $19 trillion, ahead of even Nvidia. Even at a 10x return, its valuation would be nearly $2 trillion.

As well as Sandisk has done, if memory prices come down and demand unexpectedly slows, the tech stock could quickly fall in value. Its current valuation prices in a rosy outlook, and while it may still go higher in the short term, there may be much more downside risk than there is upside at this point; thus, it could be a risky stock to buy right now.