Key Highlights
- SNDK shares rallied up to 8.9% Friday, reaching approximately $1,687 in trading
- Nvidia announced a $12.9 billion deal to purchase AI development platform Hugging Face
- AI data center demand for NAND flash memory continues accelerating, with worldwide NAND sales climbing approximately 70% sequentially in Q2
- Dell Technologies’ COO identified AI server bottlenecks as “DRAM, DRAM, DRAM, followed by NAND, NAND, NAND”
- Bernstein maintains bullish $3,000 price objective for SNDK shares
Shares of SanDisk experienced a significant rally Friday, climbing as high as 8.9% and touching an intraday peak of $1,693.71 before consolidating near $1,687 by mid-morning. The advance left SNDK up approximately 8.5% for the session, though trading volume remained lighter than its typical 13.9 million share average.
What sparked the rally? Nvidia revealed Thursday evening its plans to purchase Hugging Face in a $12.9 billion transaction. The open-source artificial intelligence platform boasts over 18 million active users, hosts 3 million models, and serves more than 200,000 enterprises building and launching AI solutions.
Nvidia CEO Jensen Huang emphasized that over 50% of the company’s revenue stems from “largely driven by open models,” with Nvidia already serving as Hugging Face’s top contributor of open models. Market watchers interpret this acquisition as Nvidia’s strategic effort to strengthen its position within the AI developer community.
How does this benefit SanDisk? The explosive growth in Nvidia’s GPU business has created corresponding demand for SanDisk’s NAND flash memory products, which serve as essential building blocks for AI-focused data centers. Essentially, Nvidia’s AI expansion directly translates to increased orders for SanDisk’s memory solutions.
This relationship received additional validation this week when Dell Technologies COO Jeffrey Clarke identified memory as the primary constraint for AI server production. “The constraints remain the same,” Clarke explained. “DRAM, DRAM, DRAM, followed by NAND, NAND, NAND.”
Strong NAND Market Conditions Support Rally
Apart from the Nvidia announcement, underlying NAND market dynamics remain favorable. Worldwide NAND sales jumped approximately 70% sequentially during Q2, powered by continued AI infrastructure expansion requiring substantial flash storage capacity. Industry supply remains constrained while pricing stays resilient.
Bernstein’s research team continues projecting a $3,000 price objective for SNDK, based on their thesis of an extended multi-year NAND supply shortage.
Competitor Micron Technology similarly advanced Friday, gaining roughly 4%, indicating the rally extended across the memory sector rather than being isolated to SanDisk.
Favorable Macro Environment Provides Additional Support
Treasury yields declined ahead of Friday’s important economic releases, providing investors with another incentive to return to high-growth chip stocks that had suffered during recent rate increases.
Broader market trends weren’t supportive. The S&P 500 declined 0.5% while the Nasdaq fell 0.48%, confirming that SanDisk’s advance was industry-specific rather than market-driven.
SNDK continues trading over 30% beneath its 52-week peak of $2,354.39. With a valuation of 23 times trailing earnings and merely 8 times forward earnings estimates, the shares appear reasonably priced compared to other AI memory sector players.
Regarding insider activity, SanDisk Chief Legal Officer Bernard Shek divested 600 shares at $1,525.60 on September 1 through a predetermined Rule 10b5-1 trading arrangement, representing standard scheduled activity without meaningful market implications.
Bernstein’s $3,000 price objective stands unchanged, while the stock currently trades around $1,687.
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