SanDisk (SNDK) Stock Rallies 5% as Memory Shortage Gets Worse – Time to Buy?

TLDR

• SanDisk stock climbed 5.16% Thursday as Kioxia’s strong guidance triggered a rally across memory chip stocks
• Japanese chipmaker Kioxia reported customers booking NAND supply for 2027-2028, two years earlier than typical one-year advance contracts
• Memory chip shortage expected to persist through 2026 as manufacturers prioritize high-bandwidth memory over NAND production
• SanDisk trades at 15x forward P/E despite sitting 14% below February peak, with gross margins expanding to 50.9%
• Micron’s early HBM4 chip shipments reinforce tight supply expectations as AI data center demand continues growing

SanDisk shares jumped 5.16% Thursday after Kioxia issued guidance pointing to an extended memory chip shortage. The rally lifted other memory stocks including Seagate Technology, up 5.87%, and Western Digital, up 3.78%.

Sandisk Corporation, SNDK

Kioxia forecast full-year sales and operating income above analyst expectations. Fourth-quarter revenue is projected at ¥890 billion with adjusted net income of ¥340 billion, both beating estimates.

The Japanese manufacturer revealed customers are securing memory contracts for 2027 and 2028. This represents a major shift from the industry norm of one-year advance bookings.

Early Contract Bookings Signal Supply Crunch

The rush to lock in future supply suggests companies expect shortages to last years, not months. Kioxia CFO Hideki Hanazawa confirmed tight supply is pushing selling prices sharply higher.

Micron started shipping next-generation HBM4 memory chips ahead of schedule. The early rollout reinforces expectations that supply constraints will continue through 2026.

NAND flash memory is used in solid-state drives for cloud servers. As companies build AI infrastructure, they need massive storage capacity for training data and outputs.

The current shortage stems from decisions made after the pandemic. Memory makers overbuilt capacity during strong electronics demand. The resulting oversupply crashed NAND prices and turned gross margins negative.

Why SanDisk Benefits Most

Companies responded by cutting NAND production and shifting capacity to DRAM and high-bandwidth memory. HBM delivers better margins and became essential for AI chip performance.

But AI data centers started buying huge quantities of NAND-based storage. With production slashed and demand surging, prices skyrocketed.

SanDisk led Thursday’s gains because it manufactures NAND chips through a joint venture with Kioxia. The company has direct exposure to rising flash memory prices.

Western Digital and Seagate, which sell data center storage products, typically follow memory pricing trends.

SanDisk stock trades 14% below its February highs despite Thursday’s rally. The pullback has created a potential entry point at attractive valuations.

The stock trades at 15 times forward earnings for fiscal 2026 ending June. That multiple drops to 7.5 times fiscal 2027 estimates.

Last quarter, SanDisk posted 61% revenue growth. Gross margins expanded from 32.3% to 50.9% year-over-year. Adjusted earnings per share jumped fivefold.

The company represents one of the few pure-play investments in flash memory after spinning off from Western Digital about a year ago.

Memory stocks had cooled earlier this year following a strong rally. Kioxia’s guidance reassured investors that elevated chip prices will continue supporting profits.

The NAND market appears to be transitioning from a cyclical business to structural growth driven by AI data center buildouts. Kioxia’s comments about 2027-2028 bookings suggest tight conditions will persist longer than many expected.

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