The last time I spoke about Sandisk (NASDAQ: SNDK), I said, “Up more than 2,000% over the last year, shares of Sandisk (SNDK) could rally even more,” adding that, “Artificial intelligence will continue to create massive demand for data centers, which will lead to further demand for NAND. After all, NAND is a vital part of the AI infrastructure for massive amounts of data storage, speed, and performance. We also have to consider that demand for more data centers (which will need more NAND) is exploding.”

Supply Cannot Keep Up with Demand

In addition, we also have to consider that artificial intelligence will continue to drive massive demand for data centers, which, in turn, will fuel further demand for NAND.

You see, as long as there’s demand for artificial intelligence and data centers, there will be substantial demand for NAND. We also have to consider that these AI developments are happening with a supply backdrop that was never really designed to keep up with the demand it’s creating. That’s why NAND supply growth will remain limited in the immediate term.

In addition, consider this.

There are about 4,000 operational data centers in the U.S. right now. An additional 1,500 to 3,000 are being planned or under construction. According to Pew Research, the South has 754 planned data centers. The Midwest has 419 planned. The West has 277 planned, and the Northeast has about 106 planned. Globally, there are about 10,807. All need NAND, which creates even more opportunity.

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AI Is Creating Significant Demand for Memory

When people think about AI, they often think about companies like Nvidia that make powerful graphics chips. But AI systems need much more than processors. They also need massive amounts of memory to store and move data quickly.

This is where Sandisk comes in. The company makes NAND flash memory, a type of storage used in solid-state drives (SSDs), laptops, smartphones, data centers, and AI servers. As AI applications become larger and more complex, companies need more high-speed storage than ever before. That surge in demand has made memory chips much more valuable.

A Memory Shortage Helped Prices Rise

Demand is only one side of the story. At the same time, memory manufacturers have been careful not to flood the market with too much supply. After several difficult years, companies reduced production and focused on improving profits instead of simply making more chips.

Now demand has returned much faster than expected.

Sincerely,

Ian Cooper