SNDK - Sandisk on Fire - ***********

Investment Analysis Clubs Saul’s Investing Discussions
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Does anyone own this or work in the industry?

I totally missed this one. It’s up 740% over the past 12 months, including 58% ytd. The NTM EV/EBITA vs 2-year fwd EBITA CAGR ratio is .1. The company’s Q3 revenue grew by 22.6% YoY and 21.4% QoQ to $2.31 billion. The revenue growth accelerated by 14.6 percentage points from 8% growth reported in Q2. Sandisk had also reported an acceleration in Q2 revenue growth by 8.6 percentage points. The company’s Q4 guidance of $2.60 billion implies a YoY growth of 38.6% and 12.7% QoQ, marking the fourth consecutive quarter of YoY revenue growth acceleration, reflecting robust AI-driven demand and improved pricing.

It seems like the physical layer is really the bottleneck for the AI wave in 2026 - energy, storage, and memory. My #1 position is IREN (20%) and I have a 6% in ALAB.

A couple days ago Bernstein doubled their price targe on SNDK:

Bernstein Société Générale nearly doubled its price target on Sandisk (SNDK) to $580 from $300 due to “unprecedented NAND shortages and price increases.”

“Previously, we thought the NAND undersupply would be in the single digits,” said Bernstein analysts, led by Mark Newman, in a Wednesday investor report. “But with the new storage platform, each GPU will map to 16 TB of SSDs, which is all incremental demand on top of the already substantial demand for NAND. Therefore, we now believe the demand will be much hotter than previously expected, leading to even higher ASP. We have tweaked up NAND ASP from 2026 to 4027 in our SNDK model, reflecting the much higher ASP expected.”

Another article I saw recently summed up the situation from some of the major memory customers:

  • Dell (DELL): Dell’s recently warned about extended memory cost inflation, as both HBM and non-HBM memory demand continues to outpace supply availability. The company’s highlighted that 70% of its server installed base is pending upgrade to newer generation, AI-accommodating infrastructure. This accordingly highlights persistent supply constraints in DRAM and NAND availability, protracting memory’s pricing tailwind.

  • HP Enterprise (HPE): HPE warned during its fiscal Q4 earnings that there’ve already been signals across DRAM suppliers about imminent pricing actions due to supply constraints. Similar trends are expected to follow for NAND in 2026, reinforcing memory’s persistent pricing tailwind.

  • Samsung (SSNLF): Samsung’s more than tripled its earnings in the December quarter after benefiting from memory’s price uplift. The company, alongside its peer SK Hynix, is reportedly mulling a price increase of as much as 70% on server DRAM prices in the current period.

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What also caught me by total surprise, the the old spinning disks (HDD) are flying off the shelf. For example the old cowboy Western Digital stock has skyrocketed due to use for massive data lakes. Here is a Gemini query that says it better than I can. (sorry if I am lazy).

As of early 2026 , the demand for Western Digital (WDC) Hard Disk Drives (HDDs) is experiencing a massive resurgence, often described by analysts as a "Storage Supercycle."1

Following the company’s successful corporate split from its flash memory business (SanDisk) in February 2025, Western Digital has emerged as a “pure-play” leader in high-capacity HDD technology.2

1. The “AI Data Lake” Era3

The primary driver for HDD demand is no longer personal computing, but the massive infrastructure required for Artificial Intelligence .4

  • Cold Storage & Training: AI models require petabytes of data for training and inference.5 While GPUs do the “thinking,” HDDs provide the “memory” where these vast “data lakes” reside.
  • Cost Advantage: HDDs remain roughly 6x to 10x cheaper per terabyte than SSDs for bulk storage. In large-scale data centers, this cost gap makes HDDs indispensable for massive data retention.6
  • Supply Constraints: Demand is so high that lead times for certain high-capacity drives have reached up to 12 months —a level of scarcity not seen in over a decade.7

2. Market Performance & Financials

Western Digital’s shift to an HDD-focused model has led to significant financial growth:8

  • Revenue Growth: In the fiscal first quarter of 2026, WDC reported revenue of $2.82 billion , a 27% increase year-over-year.9
  • Expanding Margins: Non-GAAP gross margins hit a record 43.9% in late 2025, nearly double previous years, as the company exercised significant pricing power in an oligopolistic market.10
  • Exabyte Shipments: WDC shipped 204 exabytes of storage in a single quarter (Q1 FY26), a 23% increase year-over-year, driven by “nearline” (enterprise) drives.11

3. Key Demand Segments

Segment Demand Outlook (2026)
Cloud/Hyperscale Extremely High. Top tech giants (Amazon, Google, etc.) have secured supply through 2027 to support AI and cloud expansion.
Edge AI Growing. As AI moves to local servers and industrial hubs, the need for high-capacity localized storage is increasing.
Video Surveillance Steady. High-resolution 4K/8K feeds require the sequential write reliability and cost-efficiency of HDDs.
Consumer/Gaming Stable but Secondary. Demand remains for bulk game storage and backups, though SSDs dominate for boot drives and performance.

-zane

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I believe SanDisk spun off from Western digital in Feb 2025. It’s a hot time no doubt! I’ll be watching for SNDK to dip before I buy any shares.

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