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Bullish +65

Alphabet Just Crashed The Memory Trade: Sandisk Looks Like The Winner (Upgrade)

AI-generated analysis

📉 Sandisk Corporation (SNDK) stock recently dropped double-digits due to headlines, risk-off trading, and memory industry beta, though the article argues this is a buying opportunity.

💾 Alphabet's recent paper on TurboQuant reduces KV-cache needs by at least 6x for HBM/DRAM but does not reduce persistent SSD storage demand, leaving Sandisk's NAND thesis intact.

📊 Datacenter revenue currently represents only 15% of total sales but grew 64% sequentially and 76% year-over-year in the last quarter.

🔄 The author expects SNDK stock to retest new highs in H2 as capital may rotate away from DRAM names despite near-term macro volatility.

⚖️ Street estimates for revenue and EPS over the next four years remain unchanged following the recent price decline.

🔍 The article identifies Sandisk as an AI storage play that remains early stage compared to DRAM or HBM competitors like NVIDIA.

📌 Disclosure states the author has no positions in mentioned companies and does not plan to initiate any within the next 72 hours.

Bullish Signals
  • Sandisk Corporation (SNDK) maintains an intact NAND storage thesis despite recent market volatility around Alphabet's memory trade.
  • Datacenter revenue shows strong growth with 64% sequential increase and 76% year-over-year rise in the last quarter, indicating robust demand.
  • AI storage story remains in early stages, presenting significant upside potential for SNDK as datacenter penetration expands from current low single-digit levels.
  • Recent double-digit price drop may be attractive entry point due to non-recurrent macro risks rather than fundamental deterioration.
  • Street estimates for revenue and EPS remain unchanged for the next four years, suggesting stability in analyst consensus despite short-term fluctuations.
  • Capital rotation away from DRAM names could favor NAND-focused companies like Sandisk as investors seek alternatives in the memory sector.
Risk Factors
  • The recent double-digit drop in SNDK stock is tied to headlines, risk-off trading, and memory industry beta, indicating sensitivity to market sentiment.
  • SNDK's datacenter revenue comprises only 15% of total sales despite sequential growth, suggesting reliance on smaller or more volatile business segments for AI-related upside.
  • Near-term volatility from macro risks is expected to persist, creating uncertainty for investors looking to deploy capital in the memory sector.
  • Google highlighted a paper on TurboQuant that reduces KV-cache memory requirements by at least 6x, potentially pressuring valuation multiples if investors fear broader negative impacts beyond just persistent SSD storage.
Full Analysis
TurboQuant cuts KV-cache needs by at least 6x for HBM/DRAM during AI inference, but it does not reduce persistent SSD storage demand. Therefore, Sandisk Corporation's NAND thesis remains intact. The recent double-digit drop looks tied to headlines, risk-off trading, and memory industry beta, while the Street's revenue and EPS estimates for the next four years remain unchanged. 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. Memory names, including Sandisk Corporation (SNDK), are being tested after Google highlighted a paper on TurboQuant, an algorithm that reduces KV-cache memory requirements by at least 6x in LLM inference workloads. I expect near-term volatility from macro risks to persist, but I see SNDK stock retesting new highs in H2 this year as capital may rotate away from DRAM names. The author notes a contrarian investment style and expects SNDK stock to benefit as investors potentially rotate away from DRAM competitors following the Google announcement regarding TurboQuant technology. Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in the article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.