I'm LongbridgeAI, I can summarize articles.Investor Kumquat Research maintains a Strong Buy rating on Sandisk (SNDK), arguing that recent stock declines driven by competition fears and profit-taking are unfounded. While consumer demand softens, AI-driven data center demand supports NAND pricing. KR forecasts the NAND market to reach $500 billion by 2027, valuing SNDK at roughly 4x potential earnings. The investor believes supply constraints and AI spending will sustain growth, concluding SNDK is far from its peak.
Sandisk (NASDAQ:SNDK) stock has had a bumpy ride these past few months. After an amazing run that saw the shares gain more than 5,000% over the span of a year, the stock has shed 41% since peaking in June, with October’s selling especially acute after China’s CXMT reignited competition fears by unveiling new DRAM technology and plans to enter the server memory market by year-end,
At the same time, traders appear to have locked in profits as questions around how much longer the memory boom can last have come to the fore.
The selling comes a little over a week before Sandisk reports its fiscal first-quarter results on October 29, with much of the recent chatter focused on slowing NAND prices and the growing presence of Chinese memory makers.
Top investor Kumquat Research (KR) takes those concerns seriously. Chinese investment bank GF Securities expects NAND price gains to slow to low single digits quarter-over-quarter in Q4. China’s YMTC keeps announcing technical advances, raising worries about a repeat of solar panels and EVs, where Chinese supply drove prices down.
Even so, KR argues that NAND pricing remains firm, though demand is diverging. Data center operators are still buying storage for AI buildouts, while smartphone sales are softening because higher memory costs have pushed companies like Apple to raise prices. TrendForce expects enterprise SSD prices to keep climbing in Q4 as hyperscalers place larger orders. Many of those orders are for QLC drives, a dense, lower-cost type of flash used to hold AI context data that would otherwise sit in more expensive DRAM and HBM.
In KR’s view, weaker consumer demand matters less because data centers now make up most of the market. Sandisk estimates they accounted for about 30% of NAND demand last year and roughly half today. The company also expects the NAND market to reach $300 billion this year and $500 billion in 2027.
KR uses that 2027 forecast to look at valuation. By the investor’s estimate, if Sandisk keeps its current market share and margins stay near today’s levels, it could earn about $50 billion that year. That’s roughly a quarter of its current market value, or about 4x potential 2027 earnings.
The estimate depends on supply staying tight, and Micron recently backed that view. CEO Sanjay Mehrotra said he expects conditions to be much tighter in 2027 and 2028 than in 2026, with the industry still short of supply even as NAND bit shipments grow in the mid-20% range.
KR concludes that fears about the end of the memory cycle aren’t supported by the data. With AI spending potentially topping $1 trillion in 2027 and the three biggest memory makers prioritizing DRAM and HBM over NAND, the investor expects Sandisk to keep benefiting.
“Despite the run to this point, I think SNDK is nowhere near its peak,” the 5-star investor summed up. “I am confident in memory’s prospects going into the next two years and will be holding my position throughout this near-term downtrend.”
To this end, Kumquat Research reiterated a Strong Buy on SNDK stock. (To watch Kumquat Research’s track record, click here)
That is also the conclusion reached by the Street’s analyst consensus, a rating based on 15 Buys and 2 Holds. Going by the $2,205.59 average price target, a year from now, investors will be pocketing returns of 62%. (See SNDK stock forecast)