Investing.com -- Bank of America raised its price target on SanDisk in a note on Friday, citing a tighter-than-expected NAND supply environment and strong demand driven by artificial intelligence.

BofA analyst Wamsi Mohan told investors that “NAND supply remains tight,” with pricing rising sharply, prompting the bank to lift its price target to $1,080 from $900 while reiterating a Buy rating.

The firm noted that NAND pricing is “up massively,” and addressed investor concerns about whether the current strength is sustainable.

According to BofA, this cycle could prove more durable than previous ones, supported by structural shifts in demand.

The bank highlighted a “mix shift to data centers,” which it described as “a less cyclical end market,” alongside “NAND demand from AI inferencing which we view as sustainable in the medium-term.”

SanDisk’s exposure to cloud and data center markets has increased significantly, with revenue from the segment rising from 1% in early 2024 to around 15% by late 2026, with further gains expected.

Looking ahead, BofA said it is “expecting a beat and raise quarter on pricing strength,” forecasting revenue and earnings above both company guidance and Street expectations.

The bank also raised its NAND average selling price forecasts, reflecting continued pricing momentum.

In addition, SanDisk is pursuing long-term supply agreements to smooth volatility, which BofA said could “help to maintain margins through-cycle.”

Overall, Mohan pointed to a “secular opportunity as AI inference makes NAND more indispensable,” supporting its more bullish outlook on the stock.