Shares of Sandisk have surged this year and the stock could have even more upside as Wall Street doesn't expect artificial-intelligence-fueled demand for memory to subside any time soon.

Rosenblatt analyst Kevin Cassidy initiated coverage of Sandisk stock with a Buy rating and a price target of $2,400. That price target represented 36% upside from Sandisk's closing price of $1,766.64 on Monday.

That's quite significant as Sandisk stock already has risen 644% this year and has gained more than 1,600% over the past 12 months.

"New AI compute platforms are creating an opportunity to reposition NAND flash from a commodity storage medium to a more system-critical component of AI infrastructure," Cassidy wrote.

Sandisk stock rose 6.19% to $1,876.03 on Tuesday after ending Monday down 1.4%. Among other memory stocks, U.S-listed shares of SK Hynix and Micron Technology advanced 2.3% and 2.5%, respectively.

The memory chip supply crunch has been key to Wall Street's bullish view on Sandisk and other memory stocks.

DRAM is the short-term working memory that computers and AI hardware use to manage active data and running processes. NAND flash memory is used for longer-term storage.

Wall Street expects the average selling prices of memory chips to rise more than 20% overall in the third quarter of this year from the previous quarter and that both DRAM and NAND will continue to be undersupplied moving into 2027.

Currently the biggest player in the NAND market is South Korea's Samsung Electronics with a 28% share, followed by its domestic peer SK Hynix with a 19% share. Among U.S. companies, Micron had roughly 15% share in the second quarter, while Sandisk had 11%.

Investors in the short term should take solace knowing that the memory market is growing so fast that there's still big revenue and profit growth to go around.

Cassidy believes that Sandisk is well-positioned in the current environment.

"Sandisk's technology roadmap supports this opportunity," the analyst wrote, pointing to the company's work with its technology and manufacturing partner, Kioxia, to advance NAND process technology.

Cassidy added that Sandisk could sustain a performance and cost advantage in the AI-memory space which could support the stock continuing to rise.