Sandisk's AI-fueled rally has turned it into an "elephant" in the S&P SmallCap 600, and that could put the stock ahead of bitcoin-treasury play Strategy (MSTR) in the race for the S&P 500's next open seat.
Sandisk (SNDK), a Western Digital spinout focused on flash storage and solid-state drives, has exploded roughly 515% in the past three months to a market capitalization of about $40 billion.
Stephens analyst Melissa Roberts reportedly said that Sandisk is now an "elephant" inside the S&P SmallCap 600 (SML), where no other constituent is valued above $11 billion and the stock already carries a 2.6% index weight.
Melissa Roberts is a managing director who leads Stephens' Strategic Opportunities & Index Rebalancing research. She began her career as an equity research analyst in 2002 and brings more than two decades of experience tracking index rebalancing dynamics
That size mismatch, she argued, makes Sandisk a natural candidate for promotion to the S&P 500 (SPX) in the next round of index changes.
Sandisk began as a dedicated flash-storage company after Western Digital split its operations in early 2025. Western Digital separated its traditional hard-drive division from its solid-state storage business, creating Sandisk as a pure-play manufacturer focused on NAND flash memory and SSDs. By carving out the flash unit, the company gained the independence to set its own pricing, manage supply more tightly and align fully with the exploding demand coming from AI data centers and cloud infrastructure providers.
Related: Cathie Wood buys $30M of sinking crypto stock
What a company needs to qualify for the S&P 500
To join the S&P 500, a company must meet these basic rules:
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Be a U.S. company (based in the U.S.).
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Market value big enough, usually at least $22–23 billion.
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Profitable in the most recent quarter AND over the past year.
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At least 10% of shares must be publicly traded (public float).
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Stock must have strong daily trading volume.
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A team of index committee members must agree that it fits.
Sandisk eligible for S&P 500 index
Sandisk only joined the S&P SmallCap 600 in February 2025 after being spun out of Western Digital Corp. (WDC).
The company reported revenue of about $1.70 billion, down 1% year-on-year and 10% sequentially, but still ahead of guidance. Non-GAAP loss per share came in at $0.30, at the high end of expectations, while the company guided to improving gross margins and higher revenue in the following quarter as price increases and supply discipline kicked in.
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On the surface, GAAP results looked ugly — a $1.93 billion net loss driven by a large goodwill impairment — but the market largely looked through the charge. Analysts at Bank of America and Citi have both more than doubled their price targets in recent months, citing tightening NAND supply, booming AI data center demand and Sandisk's growing role in cloud storage.
That cocktail of AI exposure and index-awkward size is why Roberts thinks the S&P committee may be forced to act.
S&P Dow Jones Indices can rebalance its benchmarks quarterly, with discretionary changes typically announced on the first Friday of the last month of each quarter. The next batch of updates is due on Dec. 5 and would take effect after the close on Dec. 19, if the committee chooses to make any moves.
Related: As MicroStrategy eyes S&P 500, analyst sees 'good chance' for Robinhood
MicroStrategy's second shot at the S&P 500
Sandisk is not the only tech name newly eligible for the S&P 500 this quarter. Strategy Inc. (MSTR), the company formerly known as MicroStrategy, also meets the committee's quantitative screens on market cap, liquidity and profitability after booking headline net income in the tens of billions of dollars under new accounting for its Bitcoin (BTC) holdings.
But Strategy already knows what it feels like to be passed over.
In September, the index committee opted to add Robinhood Markets and AppLovin to the S&P 500 while leaving Strategy on the sidelines, despite the company checking all the formal boxes for inclusion. That decision surprised many investors and prompted a round of soul-searching about how far the S&P 500 is willing to go in embracing companies whose valuations are dominated by crypto exposure rather than operating earnings.
Strategy has effectively transformed itself from a software firm into a leveraged Bitcoin holding vehicle, with 649,870 BTC on its balance sheet and a business model built around issuing equity and debt to buy more coins.
MicroStrategy's mNAV drops drastically
As Bitcoin has sold off from its highs, the company's stock has dropped roughly 60% from its peak, and its market-implied net asset value (mNAV) — the multiple of enterprise value to the market value of its Bitcoin — has slid toward 1x.
When mNAV trades well above 1, Strategy can issue new shares at a premium to its Bitcoin per-share value, raising cheap capital to buy more BTC and reinforcing a "flywheel" of accumulation. As the premium compresses, that flywheel weakens, and recent policy changes allowing more issuance at lower mNAV levels have drawn criticism from some shareholders worried about dilution..
Related: Michael Saylor finally addresses short-sellers as mNav drops
This story was originally reported by TheStreet on Nov 18, 2025, where it first appeared in the MARKETS section. Add TheStreet as a Preferred Source by clicking here.
