Key Points
Sandisk (NASDAQ: SNDK) and Palantir (NASDAQ: PLTR) are two of the most popular artificial intelligence (AI) investments on the market, but both have displayed some weakness lately. Sandisk is down around 25% from its all-time highs established just a few weeks ago, while Palantir has slowly declined from its highs set last October. It’s down around 35%.
These two may both be popular, but I think only one is worth buying right now.
Both businesses are booming
Sandisk and Palantir aren’t competitors in any way; they have two completely different businesses.
Sandisk manufactures NAND memory, which is best used in scenarios that require long-term data storage. Data centers have an immense need for massive storage, which is eating up a lot of NAND production capacity to produce solid-state drives (SSDs). Lack of supply and elevated demand equate to soaring commodity prices, and that’s the mechanism that has helped Sandisk’s revenue and profits soar over the past few months.
Two catalysts could cause Sandisk’s stock to come crashing down. First, the AI build-out could stall or wrap up, and demand for NAND memory would plummet, returning Sandisk to its old demand curve. With the AI build-out expected to last through at least 2030, I don’t see that happening anytime soon. Second, increased production capacity from Sandisk and its peers could increase supply, causing prices to fall, which would have a similar effect.
While the second option is realistic, industry peer Micron Technology informed investors that it expects market tightness to continue in the memory chip market beyond 2027. That’s great news for Sandisk, and confirms the short-term investment case for the stock.
Palantir operates an AI software business. It uses AI to help businesses automate workflows and develop applications that ingest large amounts of data and generate actionable insights. This software platform is incredibly popular with the U.S. government, as well as commercial clients. During its most recent quarter, Palantir blew expectations out of the water and reported 85% revenue growth — with demand coming from both commercial and government sectors.
As more businesses and agencies adopt an AI-first mindset, Palantir’s software will remain in high demand, so its growth is far from over.
Both Sandisk and Palantir have great core businesses with bright futures, but there is one key factor that separates these two: valuation.
Palantir’s stock is quite pricey compared to Sandisk’s
Both companies are fully profitable and growing rapidly, so valuing their stock based on the forward earnings ratio makes the most sense. However, these two are valued at two opposite ends of the spectrum.
SNDK PE Ratio (Forward) data by YCharts
At just 8.4 times forward earnings, there isn’t a ton of future success priced into Sandisk’s stock, even if investors know it’s coming. On the flip side, nearly all of Palantir’s upside has been priced into the stock, which will make it hard for the stock to rise much more over the next few years. I think that’s the ultimate difference maker between these two.
The market is concerned about Sandisk’s future, even though the next year and a half looks bright. Meanwhile, Palantir already has multiple years’ worth of growth accounted for. As a result, I wouldn’t be surprised to see Sandisk’s stock rally to close 2026, while Palantir’s continues lower. However, investors need to keep an eye on the memory chip market. If something happens and prices plummet, Sandisk’s stock could tumble as a result, so investors need to be prepared and monitor it closely.
Should you buy stock in Sandisk right now?
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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Palantir Technologies. The Motley Fool has a disclosure policy.
