Key Points
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Wall Street banker Bernstein spooked the market with worries over spot demand for NAND yesterday.
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The banker still thinks Sandisk is a buy, however, as buyers compete for limited memory supply.
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Sandisk (NASDAQ: SNDK) stock took a tumble on Thursday, sliding 5% on a report from Wall Street banker Bernstein that highlighted trouble in the spot market for computer memory.
On Friday, shares of the popular computer memory-maker bounced 8.5% through 10:15 a.m. ET — and I’ve got a hunch Bernstein is behind this movement as well.
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What Berstein says about Sandisk
The crux of yesterday’s warning was this: Computer memory supply is in deficit. There’s not enough to go around to support all the artificial intelligence chips that Nvidia (NASDAQ: NVDA), AMD (NASDAQ: AMD), and the rest are churning out. Customers are bidding against each other and driving prices up.
Problem is, NAND and DRAM prices have gotten so high that now, “OEMs & module houses [are being forced to] reduce their purchases.” Near term, this could cause price hikes to “decelerate notably into 3QCY26,” potentially slowing Sandisk’s profit growth.
What does this mean for Sandisk?
So that’s the bad news — but here’s the good news: DRAM prices soared 57% in April versus average prices in Q1. NAND prices were up 65% to 70%, according to Bernstein. So even if some buyers are forced to curtail purchases in Q2, those who have the money to spend will continue buying memory, driving “major” increases in both DRAM and NAND in Q2 2026, currently underway.
Long story short, while it’s uncertain what the future may hold medium or long term, in the near term at least, Sandisk’s guidance for $8 billion in (fiscal) Q4 sales, rising gross margins, and profits between $30 and $33 per share should be safe. (Recall that Sandisk’s fiscal calendar is two quarters ahead of the actual calendar year.)
And Bernstein still thinks Sandisk is a buy at up to $1,700 a share.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.
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