TLDR
- SanDisk shares rose 5.16% Thursday leading memory chip sector gains after Kioxia issued bullish guidance on flash memory demand
- Kioxia revealed customers are locking in NAND supply contracts for 2027-2028, indicating expectations of prolonged shortage conditions
- Flash memory prices climbing sharply as tight supply persists while AI data centers require massive storage capacity for training data
- SanDisk posted 61% revenue growth last quarter with gross margins expanding from 32.3% to 50.9% year-over-year
- Stock trades at 15x forward fiscal 2026 earnings despite recent pullback, offering potential value after 14% decline from February highs
Memory chip stocks rallied Thursday with SanDisk leading gains at 5.16% after Japanese manufacturer Kioxia released guidance suggesting the NAND shortage will extend well into 2027.
Kioxia projected fourth-quarter revenue of ¥890 billion and adjusted net income of ¥340 billion. Both figures topped analyst estimates.
The guidance sparked buying across the sector. Seagate Technology jumped 5.87%. Western Digital added 3.78%. Micron edged up 0.88%.
Kioxia’s most telling comment came when discussing customer behavior. Companies are now booking memory supply contracts for 2027 and 2028. The industry typically signs contracts just one year ahead.
This aggressive forward buying signals companies expect the shortage to last years. Kioxia CFO Hideki Hanazawa said tight conditions are driving sharp price increases for NAND chips.
Micron Shipments Add to Supply Concerns
Micron announced it started shipping HBM4 memory chips earlier than planned. The accelerated timeline reinforces expectations that memory supply will remain constrained through 2026.
The shortage traces back to strategic decisions made during the pandemic’s aftermath. Memory makers overbuilt production capacity chasing strong electronics demand.
When demand normalized, massive oversupply crashed NAND prices. Gross margins went negative for some producers.
Companies slashed NAND output and redirected factory capacity toward DRAM and high-bandwidth memory. HBM became critical for AI chips and offered superior economics.
AI Data Centers Drive NAND Demand
Then AI data centers started buying huge volumes of NAND-based solid-state drives. These drives store training data and AI model outputs.
With production cut and AI demand surging, prices rebounded sharply. Now customers are scrambling to secure future supply.
SanDisk moved most Thursday because it produces NAND chips through a Kioxia joint venture. The company has direct exposure to rising flash memory prices.
Western Digital and Seagate, which manufacture data center storage products, typically track memory pricing expectations.
SanDisk sits 14% below its February peak despite Thursday’s rally. The pullback has some analysts calling it a buying opportunity.
Valuation metrics support that view. The stock trades at 15 times forward earnings for fiscal 2026 ending in June. That drops to just 7.5 times fiscal 2027 estimates.
Recent financial results show strong momentum. Last quarter brought 61% revenue growth. Gross margins expanded dramatically from 32.3% to 50.9% year-over-year. Adjusted earnings per share surged fivefold.
SanDisk offers one of the few pure-play ways to invest in flash memory after spinning off from Western Digital roughly a year ago.
The NAND market is shifting from cyclical boom-bust patterns to what appears to be sustained growth driven by AI infrastructure buildout.
Kioxia’s comments about customers booking 2027-2028 supply suggest tight market conditions will persist longer than previously expected. Memory stocks had cooled after strong gains earlier this year, but Thursday’s rally indicates renewed investor confidence in elevated pricing power.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
