SanDisk Corp. (SNDK) shares surged 5.08% in pre-market trading on Tuesday, following a series of positive developments that boosted investor confidence in the memory chip maker. The stock's climb comes on the heels of two significant announcements: the company's upcoming inclusion in the S&P 500 index and a price target upgrade from a major investment bank.

S&P Dow Jones Indices announced late Monday that SanDisk will be added to the prestigious S&P 500 index effective November 28, replacing The Interpublic Group of Companies. This move is expected to increase demand for SanDisk shares, as index funds and ETFs tracking the S&P 500 will need to add the stock to their portfolios. The inclusion in the S&P 500 also signifies SanDisk's remarkable growth since its spinoff from Western Digital in February, with the company's market value reaching approximately $33 billion.

Adding to the positive sentiment, Morgan Stanley raised its price target for SanDisk to $273 from $263, while maintaining an "Overweight" rating on the stock. The upgrade reflects growing optimism about SanDisk's prospects in the booming memory chip market, driven by increasing demand from data centers, smartphones, and AI applications. The company's stock has already gained nearly 400% in the past three months, riding the artificial intelligence boom that has benefited many tech companies.

As SanDisk prepares to join the S&P 500, investors are showing renewed interest in the company's potential to capitalize on the growing demand for high-performance memory solutions in the AI era. The pre-market rally suggests that market participants are eager to get on board before the official index inclusion, which typically leads to increased institutional investment and improved liquidity for the stock.