Sandisk's (SNDK) fiscal Q2 guidance suggests that the company could see its third consecutive quarter of earnings improvement, with margins and earnings per share accelerating "significantly" into the calendar year end, Wedbush said in a Friday note.

The company expects fiscal Q2 adjusted EPS of $3.00 to $3.40 and revenue of $2.55 billion to $2.65 billion, exceeding analysts expectations of $1.82 and $2.36 billion, respectively.

While cloud service providers orders have been driving recent demand, requirements from other expected artificial intelligence builds like sovereign data centers, model builders, neo-clouds have not been baked into future expectations, Wedbush said, adding that industry supply is expected to remain tight for a number of quarters.

Given the recent industry pricing trends, Wedbush said that the company's management is "guiding relatively conservatively, creating room for another meaningful beat in December."

Wedbush maintained its outperform rating on the company and raised its price target to $260 from $220.

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