$Sandisk(SNDK.US)

Core conclusion: Earnings were explosive but the stock fell 7.5% after hours. The market is pricing a super-cycle that will last at least 6-8 more quarters at just 8x forward PE. This is a mispricing.

Earnings report summary:

(1) Q3 revenue of $5.95B beat expectations by 26%, EPS of $23.41 beat by 60%, gross margin of 78.4% has surpassed NVIDIA's.

(2) Q4 guidance midpoint is $8.0B, up another 34% quarter-over-quarter, accelerating not decelerating.

(2) The consumer miss reflects the company's pricing power to abandon the low-end for the high-end, not a demand issue. It's a reconfirmation of the super-cycle, a positive not a negative.

(3) The after-hours price of $1,015 implies only 8.1x forward PE, less than 1/3 of Micron's.

(4) Supply tightness confirmed to last until H2 2027-2028, with new capacity prioritized for HBM over NAND.

A neutral-conservative valuation, assuming gross margins start to decline from H2 2027, suggests a 10-12x PE for a cyclical growth stock, corresponding to a fair price range of $1,200-$1,400. An optimistic forecast, with high margins persisting into 2028+, would justify a 15-20x PE for a growth stock, corresponding to a $1,500-$2,000 share price.

$Sandisk(SNDK.US) stock price has fallen below $1,000, corresponding to the $Tradr 2X Long Sndk Daily ETF(SNXX.US) at around $82. I will sell all my other holdings and add to my SanDisk position.