Larger AI models and inference are turning NAND from a commodity into a critical component, a Rosenblatt analyst says Sandisk’s stock has soared this year, with artificial intelligence driving an intense need for memory and storage, and one analyst sees a change coming for the business as the technology takes off. The company’s NAND flash has typically been a commodity storage product, but new AI systems “are creating an opportunity to reposition” the solution as “a more system-critical component of AI infrastructure,” Rosenblatt analyst Kevin Cassidy said in a Monday note, in which he initiated coverage of Sandisk’s stock with a buy rating. NAND flash is nonvolatile, meaning it can save data without needing a constant source of power.
Demand for NAND for personal computers, smartphones and other consumer electronics has historically been driven by an increase in density, or how much data can fit into the physical area of NAND flash, and a decrease in the cost per bit, or unit of data stored inside a NAND flash cell, according to Cassidy. Larger AI models and the data-intensive process of inference, or when AI models make predictions based on learned patterns, however, “increasingly prioritize density, performance, endurance and supply certainty over the lowest absolute price,” Cassidy said. Don’t Short Yourself offers weekly money tips to help you earn it, stack it and grow it.
I would like to receive updates and special offers from Dow Jones and affiliates. I can unsubscribe at any time. Sandisk’s technology roadmap, which includes its BiCS8 and BiCS10 architecture co-developed with Japan’s Kioxia that involves stacking memory cells vertically for more storage in a smaller space, supports the opportunity Cassidy sees for NAND to “increase its value to the overall” AI system.
In Cassidy’s view, Sandisk’s NAND flash technology allows for higher density at favorable costs, which should “sustain a performance-and-cost advantage” when it comes to storage products for large-scale AI. For Sandisk’s fiscal 2027, which started in late June, he sees its overall data-center revenue reaching $21.7 billion. He expects that to rise to $28.6 billion in fiscal 2028.
Cassidy’s $2,400 price target represents upside of about 30% from the stock’s recent price of $1,849.75 during Tuesday morning trading, when it was up 4.7% from Monday’s close. **Read more:**Amazon, Palantir and 12 more top tech stock picks from UBS analysts Meanwhile, Cassidy pointed to Sandisk’s new business model agreements, which it has so far struck with eight major NAND customers. The multiyear deals, which allow customers to secure supply at certain prices, emerged as NAND shortages due to AI-driven demand have persisted. The agreements, which will cover a large amount of Sandisk’s NAND production capacity, “could increase demand visibility and reduce historical NAND-cycle volatility,” he said.
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