SanDisk (NASDAQ:SNDK) stock is down ~7% today as investors react to the same trigger weighing on the broader memory space, with Google’s newly introduced TurboQuant compression technology raising questions about how much memory future AI systems will actually require.
Claim 55% Off TipRanks
New trading tool for SNDK bullsThe algorithm is designed to significantly reduce the memory footprint of large AI models, which directly challenges the assumption that AI-driven demand will keep pushing higher at the same pace. That shift, even if still early, is enough to pressure sentiment across memory names that have rallied hard on the back of the AI buildout.
Today’s slide follows yesterday’s 3.5% drop after SanDisk announced a $1 billion investment in Nanya Technology tied to a long-term supply agreement, a move that may strengthen its positioning over time but raised near-term questions around the expected return on that investment and the potential impact on margins and cash flow.
Meanwhile, following a recent management meeting, Bank of America analyst Wamsi Mohan came away with a more constructive view on the bigger picture, particularly around demand durability.
Mohan noted that the firm is “more confident in [the] sustainability of NAND demand,” pointing to continued strength from hyperscalers and AI-related workloads. At the same time, Mohan emphasized that SanDisk is leaning into longer-term supply agreements and a shift toward higher-margin products, which should support revenue growth over time.
During the meeting, Mohan pointed to management’s comments on Google’s TurboQuant compression technology. While the market reaction focused on the idea that more efficient AI models could reduce memory demand, the analyst noted that management sees the impact differently. Specifically, improved efficiency may enhance the return on investment for hyperscalers, potentially encouraging broader adoption of AI workloads. In that scenario, lower memory requirements per model could be offset by higher overall usage, ultimately supporting demand rather than weakening it.
At a higher level, Mohan’s takeaway suggests that while near-term volatility is being driven by concerns around AI efficiency and spending, the underlying demand story remains intact. The analyst also highlighted that new business models, including multi-year contracts with both fixed and variable pricing components, could help smooth out some of the historical swings in the memory market.
To this end, Mohan rates SNDK shares a Buy, while his $900 price objective implies ~42% upside from current levels. (To watch Mohan’s track record, click here)
The rest of Wall Street is also leaning positive on the shares, though with a more measured tone. SNDK carries a Strong Buy consensus based on 15 analyst ratings, including 12 Buys and 3 Holds. The average price target stands at $700, implying about 11% upside from current levels, while the high-end estimate reaches $1,000. (See SNDK stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.