Melius Research Sets $3,600 SanDisk Target on $100 Billion Buyback Potential

Melius Research raised its price target on SanDisk to $3,600, predicting the newly independent memory maker could return nearly $100 billion to investors through share repurchases over the next three years. Ben Reitzes, head of technology research at Melius, outlined the thesis on CNBC following the company's analyst day, as first reported by Yahoo Finance. Reitzes cited a fundamental shift in how cloud providers purchase memory chips, driven by the expanding infrastructure requirements of artificial intelligence applications.

The projection marks a significant departure from Wall Street's historical view of memory as a highly cyclical commodity business. SanDisk stock currently trades around $1,613.45 with a market capitalization of roughly $238 billion and a trailing price-to-earnings ratio of 21x. While the equity has already surged 492% year-to-date, Reitzes’ target values the semiconductor firm at approximately 11 times forward earnings estimates, leaving substantial room for upside if cash flow targets materialize. Sell-side consensus currently sits lower, with an average price target of $2,053.50 across 18 Buy, four Hold, and one Sell ratings.

Central to the bullish outlook is a structural transformation in customer contracting. During its fourth-quarter earnings call, SanDisk management revealed that eight major data center and edge clients—including technology giants Google and Microsoft—have entered into long-term "New Business Model" agreements. These multi-year contracts guarantee a minimum revenue baseline of $93.9 billion at floor pricing, supported by $16.5 billion in customer financial guarantees and extending over a weighted-average duration of more than four years.

SanDisk Chief Executive Officer David Goeckeler noted on the call that hyperscale clients are providing demand forecasts extending through the end of the decade to lock in supply. By agreeing to floor prices and long-term commitments, major cloud operators are actively surrendering short-term pricing flexibility to avoid supply shortages, effectively shielding SanDisk from traditional memory downturns. Goeckeler highlighted that the company views share buybacks as the primary vehicle for delivering value to shareholders under its current cash-generation profile.

SanDisk’s recent financial results support the aggressive capital return projections. The company generated $11.43 billion in net income for fiscal year 2026, maintaining a clean balance sheet with a negligible debt-to-equity ratio and zero term loan B debt. Its data center business proved to be the primary growth driver, expanding 437% year-over-year. The board of directors recently authorized an additional $14 billion for share repurchases, raising the total remaining authorization to $15.5 billion after the company retired 2.8 million shares for $4.5 billion in a single quarter.

Near-term financial guidance indicates that cash creation is continuing at an accelerated pace. SanDisk projects first-quarter fiscal 2027 revenue between $10.30 billion and $10.80 billion, with non-GAAP earnings per share expected between $44.00 and $46.00. Extrapolating these quarterly projections over a 12-quarter horizon yields the cash capacity necessary to complete a $100 billion share repurchase program, assuming capital intensity remains near the guided target of roughly 6% for full-year fiscal 2027.

Despite the optimistic forecasts, analysts note that SanDisk faces risks inherent to the memory sector. The company has operated as an independent public entity only since February 21, 2025, following its separation from Western Digital, leaving limited standalone history to gauge performance across economic downturns. Historically, deep cyclical drops in memory spot pricing have tested long-term supply agreements. For Reitzes' $100 billion return thesis to fully play out, hyperscaler commitments must endure without major renegotiation, capital expenditures must remain disciplined, and uncontracted flash memory prices must avoid a severe collapse.