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2 AI Stocks I'd Buy Before Sandisk -- Even After Its Stock Has Surged More Than 2,200% in the Past Year

April 11, 2026 — 01:58 am EDT

Written by

Stefon Walters for

The Motley Fool->

Key Points

- Sandisk has taken advantage of a shortage in digital storage devices to raise its prices and drastically boost its profits and margins.

- Alphabet and Microsoft are vertically integrated companies that will thrive whether or not the AI market's development goes as expected.

- 10 stocks we like better than Alphabet ›

The "Magnificent Seven" stocks are getting a lot of attention amid the current AI boom, but no big tech stock has experienced as much success over the past year as Sandisk (NASDAQ: SNDK). In the past 12 months, the memory specialist's shares are up more than 2,200%, making it one of the market's best performers over that span.

Despite its success and key role in the AI pipeline, there are two tech stocks that I'd buy before touching Sandisk now. That isn't a knock on the memory company; I'm just more of a long-term believer in Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) and Microsoft (NASDAQ: MSFT).

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Image source: The Motley Fool.

Why has Sandisk's stock surged so much in the past year?

At the foundation of AI is data: Training on enormous quantities of it and then rapidly analyzing still more is what makes AI models useful. It's for this reason that the companies responsible for highly utilized AI models have tons of data that needs to be stored in a way that it can be accessed rapidly. That's where Sandisk comes into the picture. It makes high-capacity storage devices found in data centers.

As hyperscalers have built their massive data centers -- and committed hundreds of billions of dollars to build more -- they have created a shortage of the types of storage devices that Sandisk makes. That isn't ideal for its customers, but it's a good spot to be in as a supplier.

Sandisk has capitalized on sharply rising storage demand and the resulting hardware shortages to raise prices, drastically increasing its profitability and margins. In its fiscal 2026 second quarter, its net income increased 617% from its fiscal Q1 quarter to $803 million (and up 672% year over year). Meanwhile, its gross margin rose to 50.9%, up 21.1 percentage points from fiscal Q1.

Sandisk is a niche stock that investors have flocked to, hoping to take advantage of growing demand for digital storage from the AI world.

The 2 stocks I would invest in before Sandisk

Sandisk's business is at the right place at the right time, but when it comes to investing in AI stocks, I would much rather go with Alphabet (NASDAQ: GOOGL)(NASDAQ: GOOG) or Microsoft (NASDAQ: MSFT) because they're full-stack, vertically integrated AI companies rather than niche plays.

Both own data centers, major cloud platforms, and have end products and services that they use to distribute their AI models and monetize them. With their vertical approaches, Alphabet and Microsoft benefit from three major phases of the AI pipeline, but the most important may be their cloud platforms, Google Cloud and Azure. Although neither is as large as the leading infrastructure provider, Amazon Web Services, the No. 2 and No. 3 players provide a lot of computing power that other AI companies need.

The positions them to benefit from the growing AI industry without relying solely on the success of their own products and services. Sandisk, on the other hand, relies purely on sales volume for its success.

I trust Alphabet and Microsoft more in the long run

The current shortage of storage devices won't be a long-term issue, as companies like Samsung and Micron are ramping up their ability to produce them at scale. That will inevitably affect Sandisk. Eventually, it will have to lower its prices to stay competitive. This could take away the one thing that many investors flocked to the company for.

Alphabet and Microsoft have their hands in many parts of the tech world. They each do something extremely well (Google Search for Alphabet and enterprise software for Microsoft), but also have many different parts to their businesses. That makes them more sustainable. Even if the current AI boom turns out to be a "fad" (though realistically, it's here to stay), both companies are built to keep thriving.

MSFT Revenue (Quarterly) data by YCharts.

Both companies continue to be cash cows that grow their revenue and profits impressively