Sandisk Anticipates Continued Growth in Memory Demand
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Source: seekingalpha
- Sustained Memory Demand: Sandisk's CTO Alper Ilkbahar indicated that the memory crunch driven by AI demand is unlikely to dissipate soon, leading to over $42 billion in five-year supply agreements with multiple customers.
- Surge in AI Compute Needs: As large language models (LLMs) become more complex, their memory requirements are increasing, resulting in a global shortage of dynamic random access memory and NAND flash memory, which further drives demand for Sandisk's products.
- High-Bandwidth Flash Technology: Sandisk is developing high-bandwidth flash (HBF), expected to be critical for inference, with samples available by the end of this year and full product launch anticipated next year, enhancing its competitive edge in AI computing.
- Stock Surge and Market Outlook: Sandisk's shares have surged 4,000% over the past year, with global memory prices projected to increase by at least 250% by 2026, further enhancing Sandisk's attractiveness in the memory/storage sector.
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Analyst Views on SNDK
Wall Street analysts forecast SNDK stock price to fall
14 Analyst Rating
11 Buy
3 Hold
0 Sell
Strong Buy
Current: 1641.640
Low
220.00
Averages
283.69
High
410.00
Current: 1641.640
Low
220.00
Averages
283.69
High
410.00
About SNDK
SanDisk Corporation is a developer, manufacturer and provider of data storage devices and solutions based on NAND flash technology and has consumer brands and franchises globally. The Company's solutions include a range of solid state drives (SSDs) embedded products, removable cards, universal serial bus (USB) drives, and wafers and components. Its broad portfolio of technology and products addresses multiple end markets of Datacenter, Edge and Consumer. Its Datacenter end market is composed primarily of products for public or private cloud environments and enterprise customers. The Company, through the Edge end market, provides original equipment manufacturer and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, virtual reality headsets, at-home entertainment, and industrial spaces. The Company serves the Consumer end market with a broad range of retail and other end-user products.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Revenue and EPS Forecasts: Rakesh increased SanDisk's FY2027 revenue estimate to $45.3 billion from $42.3 billion, surpassing Wall Street's consensus of $43.6 billion, indicating strong growth potential over the next two years.
- NAND Market Outlook: Mizuho expects NAND tightness to persist into 2027, with non-AI customers undersupplied by 30% to 50%, suggesting robust structural demand that could drive long-term growth for SanDisk.
- Emerging Growth Drivers: Rakesh highlighted
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- Large Portfolio Management: At Atreides Management, Baker oversees approximately $7 billion in public and private investments, and although his complete returns are not disclosed, his Sharpe ratio of 2.46 significantly exceeds the industry average, indicating high returns with controlled risk.
- AI Sector Valuation Analysis: On the All-In podcast, Baker highlighted the 'cross-sectionally inefficient' valuations in the AI sector, noting that memory stocks like Micron and Sandisk are currently undervalued, while Nvidia's low P/E suggests potential for price appreciation.
- Investment Strategy Recommendation: Baker advises investors to favor cheaper stocks like Micron and Nvidia over high-valuation stocks like Lumentum, which rely on multiple expansions for growth, suggesting that in the event of overall AI sector fluctuations, the cheaper stocks are likely to outperform in the long run.
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- Outstanding Investment Performance: As Chief Investment Officer at Atreides Management, Baker oversees approximately $7 billion in investments and achieved over 19% compound annual returns while managing the OTC Portfolio at Fidelity, outperforming 99% of his peers, showcasing his exceptional prowess in tech investing.
- Market Cyclicality Risks: Baker emphasized that memory chip stocks like Micron and Nvidia may perform better in the current AI cycle, while optical stocks like Lumentum, which rely on multiple expansions, could face greater downside risks, necessitating cautious evaluation by investors.
- Investment Strategy Recommendation: Baker advises investors to opt for cheaper stocks like Micron and Nvidia within the AI sector, steering clear of high-valuation stocks that depend on multiple expansions, aiming for better long-term returns throughout the AI industry's cyclical nature.
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- Positive Economic Data: The May Chicago PMI rose by 13.5 to 62.7, far surpassing expectations of 50.3, marking the fastest expansion pace in 4.25 years, which further bolstered market confidence in stocks.
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- Impressive Financial Performance: The company's fiscal third-quarter revenue soared 233% year-over-year to $1.47 billion, primarily driven by strong performance in data center and edge computing segments, showcasing its competitiveness in a rapidly growing market.
- Significant Margin Increase: Sandisk's gross margin jumped from 22.7% to 78.4%, a level typically seen in software-as-a-service companies, reflecting that memory demand far exceeds supply, allowing the company to substantially raise prices.
- Price and Valuation Discrepancy: Despite a 4000% stock price increase over the past 12 months, Sandisk's forward P/E ratio stands at just 23, below the Nasdaq-100's 26, indicating market concerns about the sustainability of its growth, suggesting risk-averse investors may need to be cautious.
See More
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- Stock Surge: Sandisk's shares have skyrocketed by 4,000% over the past year, transforming a $25,000 investment into over $1 million, highlighting its critical role amid surging demand for data center hardware.
- Revenue Growth: The company reported a 233% year-over-year increase in third-quarter revenue to $1.47 billion, primarily driven by strong performance in data centers and edge computing, underscoring its significant position in AI data center development.
- Margin Expansion: Sandisk's gross margin soared from 22.7% to 78.4%, a level typically seen in software-as-a-service companies, reflecting that demand for memory is vastly outpacing supply, which has led to substantial price increases.
- Future Outlook: Despite the stock's dramatic rise, Sandisk's forward P/E ratio stands at just 23, below the Nasdaq-100's 26, indicating market concerns about its long-term growth potential, especially in light of the possibility that AI may become a bubble.
See More
Mizuho Raises SanDisk Price Target to $1,825 Amid Strong Earnings Revisions
- Price Target Increase: Mizuho analyst Vijay Rakesh raised SanDisk's price target from $1,625 to $1,825, implying approximately 12% upside from the stock price at the time, reflecting a positive outlook on the company's future earnings power.
- Revenue and EPS Forecasts: Rakesh increased SanDisk's FY2027 revenue estimate to $45.3 billion from $42.3 billion, surpassing Wall Street's consensus of $43.6 billion, indicating strong growth potential over the next two years.
- NAND Market Outlook: Mizuho expects NAND tightness to persist into 2027, with non-AI customers undersupplied by 30% to 50%, suggesting robust structural demand that could drive long-term growth for SanDisk.
- Emerging Growth Drivers: Rakesh highlighted
See More
Gavin Baker's Insights on AI Stock Valuations
- Outstanding Returns: Gavin Baker achieved a compound annual return rate exceeding 19% while managing the OTC portfolio at Fidelity, outperforming 99% of his peers, showcasing his exceptional investment acumen and market insight.
- Large Portfolio Management: At Atreides Management, Baker oversees approximately $7 billion in public and private investments, and although his complete returns are not disclosed, his Sharpe ratio of 2.46 significantly exceeds the industry average, indicating high returns with controlled risk.
- AI Sector Valuation Analysis: On the All-In podcast, Baker highlighted the 'cross-sectionally inefficient' valuations in the AI sector, noting that memory stocks like Micron and Sandisk are currently undervalued, while Nvidia's low P/E suggests potential for price appreciation.
- Investment Strategy Recommendation: Baker advises investors to favor cheaper stocks like Micron and Nvidia over high-valuation stocks like Lumentum, which rely on multiple expansions for growth, suggesting that in the event of overall AI sector fluctuations, the cheaper stocks are likely to outperform in the long run.
See More
Gavin Baker Highlights Valuation Inefficiencies in AI Stocks
- AI Stock Valuation Analysis: Fund manager Gavin Baker identified a 'cross-sectional inefficiency' in AI stocks, suggesting that both cheap and expensive stocks cannot accurately reflect their true value, potentially exposing investors to volatility risks within the same cycle.
- Outstanding Investment Performance: As Chief Investment Officer at Atreides Management, Baker oversees approximately $7 billion in investments and achieved over 19% compound annual returns while managing the OTC Portfolio at Fidelity, outperforming 99% of his peers, showcasing his exceptional prowess in tech investing.
- Market Cyclicality Risks: Baker emphasized that memory chip stocks like Micron and Nvidia may perform better in the current AI cycle, while optical stocks like Lumentum, which rely on multiple expansions, could face greater downside risks, necessitating cautious evaluation by investors.
- Investment Strategy Recommendation: Baker advises investors to opt for cheaper stocks like Micron and Nvidia within the AI sector, steering clear of high-valuation stocks that depend on multiple expansions, aiming for better long-term returns throughout the AI industry's cyclical nature.
See More
US Stock Indices Reach All-Time Highs Amid Positive Economic Signals
- Strong Market Performance: The S&P 500 rose by 0.22%, the Dow Jones Industrial Average increased by 0.72%, and the Nasdaq 100 climbed by 0.36%, with all three indices reaching new all-time highs, reflecting market confidence in economic recovery.
- Tech Stocks Lead Gains: Dell Technologies surged 32% after reporting Q1 total revenue of $43.84 billion, significantly exceeding the consensus estimate of $35.52 billion, and raised its 2027 revenue forecast to between $165 billion and $169 billion, indicating strong market demand and growth potential.
- Positive Economic Data: The May Chicago PMI rose by 13.5 to 62.7, far surpassing expectations of 50.3, marking the fastest expansion pace in 4.25 years, which further bolstered market confidence in stocks.
- Oil Price Decline Benefits Stocks: Crude oil prices fell over 1% to a five-week low due to a preliminary agreement between the US and Iran, easing inflation concerns and supporting the upward trend in the stock market.
See More
Sandisk's 4000% Stock Surge Driven by AI Demand
- Surging Market Demand: Sandisk's enterprise NAND flash solutions are in high demand due to the surge in AI data centers, with global spending on AI data center build-out expected to reach $7 trillion by 2030, positioning Sandisk favorably in this trend.
- Impressive Financial Performance: The company's fiscal third-quarter revenue soared 233% year-over-year to $1.47 billion, primarily driven by strong performance in data center and edge computing segments, showcasing its competitiveness in a rapidly growing market.
- Significant Margin Increase: Sandisk's gross margin jumped from 22.7% to 78.4%, a level typically seen in software-as-a-service companies, reflecting that memory demand far exceeds supply, allowing the company to substantially raise prices.
- Price and Valuation Discrepancy: Despite a 4000% stock price increase over the past 12 months, Sandisk's forward P/E ratio stands at just 23, below the Nasdaq-100's 26, indicating market concerns about the sustainability of its growth, suggesting risk-averse investors may need to be cautious.
See More
Sandisk Shares Surge Amid AI Demand Surge
- Stock Surge: Sandisk's shares have skyrocketed by 4,000% over the past year, transforming a $25,000 investment into over $1 million, highlighting its critical role amid surging demand for data center hardware.
- Revenue Growth: The company reported a 233% year-over-year increase in third-quarter revenue to $1.47 billion, primarily driven by strong performance in data centers and edge computing, underscoring its significant position in AI data center development.
- Margin Expansion: Sandisk's gross margin soared from 22.7% to 78.4%, a level typically seen in software-as-a-service companies, reflecting that demand for memory is vastly outpacing supply, which has led to substantial price increases.
- Future Outlook: Despite the stock's dramatic rise, Sandisk's forward P/E ratio stands at just 23, below the Nasdaq-100's 26, indicating market concerns about its long-term growth potential, especially in light of the possibility that AI may become a bubble.
See More
