Sandisk shares surged more than 20% in premarket trading Friday after the storage solutions provider reported earnings for its fiscal second quarter that crushed analyst expectations and issued third-quarter guidance that stunned Wall Street.

The company reported adjusted earnings per share of $6.20 for the second quarter, dramatically outpacing the analyst estimate of $3.49. Revenue came in at $3.03 billion, well above the consensus estimate of $2.67 billion and up 31% sequentially.

Sandisk shares surged 559% last year on booming AI-driven demand and have risen a further 127% so far this year, based on Thursday’s close.

Datacenter revenue jumped 64% sequentially, driven by “strong adoption among AI infrastructure builders, semi-custom customers, and technology companies deploying AI at scale,” according to the company’s earnings release.

“This quarter’s performance underscores our agility in capitalizing on better product mix, accelerating enterprise SSD deployments, and strengthening market demand dynamics,” said David Goeckeler, CEO of Sandisk.

“Our structural reset to align supply with attractive, sustained demand positions us to drive disciplined growth and deliver industry-leading financial performance.”

The company forecasts revenue between $4.4 billion and $4.8 billion, substantially higher than the consensus estimate of $2.92 billion. Adjusted earnings per share are projected to be between $12.00 and $14.00, nearly triple the analyst consensus of $4.21.

The midpoint of Sandisk’s revenue guidance ($4.6 billion) represents a 73% increase from the second quarter, signaling accelerating momentum in the company’s business, particularly in AI-related storage solutions.

“Despite a persistent march higher in Sandisk shares, earnings power continues to keep pace,” Morgan Stanley analyst Joseph Moore said in a post-earnings note. 

“At still a sub 10x PE on where numbers are likely headed we see a sustained bid for the stock despite the rally,” he wrote, raising the price target to $690 from $483.

Separately, Raymond James analyst Melissa Fairbanks said that “even after the recent move — up more than 16x since the spin-off from Western Digital a year ago,” she still sees scope for further upside, driven by demand and pricing benefits from an “unprecedented datacenter/AI cycle.”