SanDisk (NASDAQ:SNDK) jumped about 9% today, moving higher alongside other memory and storage names as markets reacted to ceasefire headlines tied to easing tensions between the U.S. and Iran. The news helped push oil prices lower and improved overall risk appetite, prompting investors to rotate back into higher-growth areas of the market, including semiconductors.
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Forget margin or options. Here's how the pros trade SNDKFrom here, attention shifts back to the underlying story. Industry data continues to point to tight supply conditions and improving pricing in NAND, supported by ongoing demand from AI-related infrastructure. That combination has been the core driver behind the sector’s strength and remains the key factor investors are watching.
That said, the upward move has come with its share of volatility lately. SanDisk shares had come under pressure following Google’s TurboQuant announcement, which introduced a compression technology aimed at making AI models far more memory-efficient. For SanDisk, that raised a key concern – if each workload requires less memory, the pace of demand growth for NAND could slow, potentially capping pricing power and shortening the current upcycle.
One top investor, known by the pseudonym Deep Value Investing, contends that the market may have overreacted, with the initial response reflecting uncertainty rather than a clear shift in the longer-term outlook.
“I am not downplaying the TurboQuant headline, even though my view is that SanDisk has no negative exposure to the algorithm optimization,” states the 5-star investor, who is among the top 2% of stock pros covered by TipRanks.
Deep Value notes that the potential decrease in memory has yet to be incorporated into the market, and as of now, Wall Street revenue and earnings projections remain unchanged.
Moreover, a deeper look at the technological breakthrough gives Deep Value even more confidence in SanDisk’s potential. The investor explains that TurboQuant could pose a risk to high-bandwidth memory and DRAM companies, as it enables “massive compression for large language models.”
However, TurboQuant doesn’t reduce the requirement to store large quantities of datasets. In other words, models, datasets, checkpoints, logs, retrieved documents, and other persistent data will still need to be retained on SSDs, emphasizes Deep Value.
“Let me say it clearly. Despite the TurboQuant algorithm optimizations, inference is still feeding stored data (that’s where Sandisk is positioned with its SSD memory chips) into computing chips,” adds the investor.
In addition, Deep Value points out that SanDisk is relatively early in the AI part of its cycle, with plenty of room to run.
“I’m bullish as SNDK’s AI storage story still looks early, with datacenter revenue only 15% of total sales despite 64% sequential growth and 76% YOY growth in the last quarter,” sums up Deep Value, who rates SNDK a Strong Buy. (To watch Deep Value Investing’s profile, click here)
Wall Street’s stance remains supportive as well. SNDK stock boasts a Strong Buy consensus based on 15 analyst ratings, with the vast majority leaning bullish. That said, the average price target sits at $707.14, implying ~11% downside from current levels after the stock’s rally, while estimates vary widely, with high-end forecasts reaching $1,000. The spread reflects a market that still believes in the long-term upside tied to the memory cycle, but is becoming more divided on how much of that optimism is already priced in. (See SNDK stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.