SanDisk Surges Over 160% In 2026, Outpacing Software's 23% Slump As 'Big Money' Shifts To AI Infra
Institutional investors are aggressively rotating out of software and into AI hardware, driving massive year-to-date gains for memory and storage leaders while leaving traditional tech sectors behind.
The Monumental Rotation Of 2026
The technology landscape has shifted dramatically in 2026. While major indices remain relatively flat, a “monumental rotation” is occurring under the surface. According to Lucas Downey, co-founder of MoneyFlows.com, the market is moving away from the Mag Seven story of previous years.
"2026 has been one of those great years where you get indices that are basically flatlining, but you have a lot of stocks under the surface that are just doing tremendously well," Downey noted in a recent interview with Schwab Network.
He highlighted a distinct shift where “big money” is deserting software-as-a-service (SaaS) in favor of the physical infrastructure required to power artificial intelligence. “We focus on where the big money has been going, and it has been literally nonstop money going into Micron. Also SanDisk and also Lam Research,” he added.
Hardware Triple-Digit Gains Vs. Software Slump
The performance gap is stark. SanDisk Corp. (NASDAQ:SNDK), which spun off from Western Digital a year ago, has become the poster child for this trend, surging a staggering 160.80% YTD. This gain stands in sharp contrast to the iShares Expanded Tech-Software Sector ETF (BATS:IGV), which has cratered 22.64% over the same period.
Other semiconductor and memory plays are following SanDisk's lead. Micron Technology Inc. (NASDAQ:MU) has climbed 44.59% YTD, while fabrication giant Lam Research Corp. (NASDAQ:LRCX) is up 34.96%.
Downey attributes this to a severe “bottleneck” in AI chips and storage that is expected to last two years, allowing these companies to command premium pricing.
Surging Fundamentals And Capitulation
Explosive fundamentals back the rotation. SanDisk's revenue is projected to double to $15.2 billion in 2026, with operating income expected to hit $7 billion—a tenfold increase from 2025.
Meanwhile, software is facing “signs of capitulation.” While bellwethers like Nvidia Corp. (NASDAQ:NVDA) remain strong on guidance, Downey suggests investors are looking toward mid-cap tech for alpha.
"As long as earnings continue to be on the high end… these stocks are priced to go higher and higher," Downey concluded.
Photo courtesy: Nor Gal / Shutterstock.com
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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