Prediction: This Artificial Intelligence (AI) Chip Stock Will Soar After Sept. 30 (Hint: It’s Not Micron)
One of the most talked-about themes in artificial intelligence (AI) right now is the memory supercycle. It is the entire reason why Sandisk (NASDAQ: SNDK) and Micron Technology (NASDAQ: MU) trade like they are glued together.
One company is the NAND flash specialist that came out of a spinoff from Western Digital, while the other is the DRAM and high bandwidth memory (HBM) heavyweight.
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Together, Sandisk and Micron sit on opposite sides of the same coin: storage that holds data and memory that feeds GPUs. When one reports a blowout quarter, the other tends to follow. That is why Micron’s earnings on Sept. 30 matter for Sandisk investors. A strong print would not just lift Micron stock; it would confirm that the memory trade still has room to run.
Sandisk already showed the memory boom is intact on the NAND side
Sandisk just finished its first full year as a stand-alone public company. Frankly, the numbers look slightly unreal.
Revenue for the full year reached $20.25 billion, up 175% year over year. During the fourth quarter alone, Sandisk brought in $8.9 billion, up 372% from a year earlier and 51% sequentially. Pricing power did most of the heavy lifting. Management said roughly two-thirds of the jump came from higher average selling prices, not just more shipments.
The real story sits inside the company’s data center segment. That slice went from a rounding error to a quarter of the business in a year. Data center revenue reached $2.9 billion in the fourth quarter, more than double the prior quarter and up barely 1,300% year over year. For the full year, the data center segment grew 437% to $5.2 billion. While edge products still make up the biggest piece of sales, data center is where the mix is shifting and the margins are becoming juiciest.
The New Business Model agreements are what make Sandisk’s runway look more lucrative than that of a typical memory cycle. Sandisk now has eight of these multiyear supply deals at floor pricing of $93.9 billion in expected revenue over the life of the contracts.
Remaining performance obligations (RPO) sit at around $91.1 billion once deals signed after quarter-end are included. These deals are not a result of memory’s traditional spot-market story. Instead, Sandisk is now in the driver’s seat and able to command booked demand stretching years into the future.
