SNDK Stock Rebounds After 35% Drop This Week – Sandisk’s AI-Fueled Growth Is 'Tremendous, But Finite,’ Says Analyst

• Morningstar analyst William Kerwin expects AI infrastructure spending to keep supporting NAND demand and pricing over the next few years, boosting SanDisk's revenue and margins.
• He forecasts that SanDisk's revenue will grow at a 27% compound annual rate through fiscal 2030, with gross margins exceeding 80% in fiscal 2027.
• However, the analyst expects the current NAND pricing cycle to peak around 2028, followed by a downturn in 2029 as new industry capacity comes online.

SanDisk (SNDK) shares rose in premarket trading on Wednesday alongside a broader market recovery after the previous session's sell-off, while Morningstar said the AI-driven boom in NAND memory could continue to lift the stock in the near term. However, it added that the chipmaker lacks the competitive advantages needed to sustain those gains over the long run.

In a research note, Morningstar Senior Equity Analyst William Kerwin said SanDisk's "exponential pricing growth is tremendous, but finite," citing that the memory chipmaker lacks an economic moat because NAND flash memory remains a commodity business with little pricing power.

Morningstar maintained a price target of $1,000 on SNDK stock, below its closing price of around $1,096 in the previous session. The firm also assigned SanDisk a ‘Very High’ uncertainty rating.

In pre-market rade on Wenesday, SNDK stock rose as much as 1.6% lifting the shares above $1,100 if gains hold till market open. As of Tuesday’s close, the shares had fallen over 35% so far this week. 

AI Demand Will Be Key Driver Of SNDK Stock Gains

The Morningstar analyst expects AI infrastructure spending to keep driving unusually strong demand for NAND flash memory over the next few years. He wrote that because new manufacturing capacity takes years to build, limited supply has pushed memory prices sharply higher, lifting revenue and margins across the industry.

Morningstar forecast SanDisk's revenue will grow at a 27% compound annual rate through fiscal 2030, with gross margins exceeding 80% in fiscal 2027 as tight supply supports elevated pricing.

Morningstar Sees Pricing Boom Peaking Around 2028

However, Kerwin stated that SNDK’s gains would be “cyclical” rather than “structural.” The analyst said that NAND flash memory as largely interchangeable across suppliers, which meant that manufacturers have little ability to command premium pricing. Instead, pricing is determined largely by industry supply and demand, leaving earnings vulnerable whenever additional production enters the market.

The firm forecast that the current pricing cycle would peak around 2028, when new manufacturing capacity from SanDisk and its competitors starts to come online. It expects a sharp downturn in 2029, with NAND prices retreating after the AI-driven supply shortage eases.

Morningstar also identified competition from Chinese memory manufacturer YMTC and the capital-intensive nature of NAND manufacturing as key long-term risks, saying both make it difficult for SanDisk to generate durable excess returns.

How Is Retail Feeling About SNDK Stock?

Retail sentiment on Stocktwits around SNDK shares rose to ‘extremely bullish’ from ‘bearish’ over the past day, and chatter rose to ‘extremely high’ from ‘high’ levels. Platform data showed that message volume had more than doubled in the last 24 hours. 

On Stocktwits, some retail traders stated that a drop below $1,000 is “inevitable,” while others worried that it may lead to panic selling. Others expect the SNDK stock price to rally today and some fretted over the volatility in the shares. 

Despite recent volatility, SNDK stock has outpaced peers, with a gain of nearly 350% this year.

Read also: SNDK Stock Plunges Over 30% In 3 Days Amid Semiconductor Rout – Retail Traders Debate Whether $1,000 Will Hold

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