SanDisk Bounces Back Nearly 35% Weekly; Latest Financial Outlook and NAND Technology Roadmap Serve as Catalysts

According to MarketWatch, SanDisk (SNDK-US) stock has continued a strong rebound from recent lows, with cumulative gains exceeding 60% in just over two weeks.

SanDisk closed Friday (14th) up 7.4%, following a 13.7% surge the previous trading day. This rally reflects Wall Street's optimistic stance toward SanDisk's latest financial targets and technology development roadmap.

The memory and storage device manufacturer announced during its investor day event on Thursday that it expects revenue to grow at a mid-to-high single-digit percentage rate for the fiscal years 2028 to 2030. SanDisk also aims to maintain a high gross margin of approximately 80% during this period. The company stated that its 'new business model' agreements, which enhance visibility into customer demand, are one reason it has greater confidence in these targets.

SanDisk also plans to maintain an operating margin of around 75% during this timeframe. However, Morgan Stanley analyst Joseph Moore noted that, considering current memory chip shortages are boosting profit margins, he believes this level will be difficult to sustain long-term.

Nonetheless, Moore stated in a report to clients that SanDisk 'can maintain or exceed these margin levels over the coming years,' as supply is expected to increase by 20% to meet data center demand, while other areas of the memory and storage industry also face supply shortages.

JPMorgan analyst Harlan Sur said SanDisk's new business model agreements are one reason he believes the company has a 'unique advantage in capturing the ongoing structural shift in NAND demand.'

In his report to clients, he stated that these long-term agreements 'structurally reset SanDisk's margin levels higher and significantly reduce cyclicality,' referring to the historical price and profit volatility in the memory industry tied to economic cycles.

At the same time, the NAND flash memory maker heavily promoted its upcoming high-bandwidth flash memory technology. SanDisk said this technology complements high-bandwidth memory (HBM) and could potentially replace some HBM applications.

Bernstein analyst Mark Newman said the product could become 'a significant new growth driver for NAND demand,' but could also 'consume wafer supply heavily, causing shortages to last far longer than most bulls expect.'

Newman estimates that due to the increased on-chip space required by high-bandwidth flash memory, the wafer production capacity needed per exabyte of product will be three to four times that of standard products.

Morgan Stanley's Moore said the stock's reaction following SanDisk's investor day was likely driven by the company's 'reasonable long-term financial model' and its commitment to return 100% of excess cash to shareholders.