Sandisk Says AI Has a ‘Memory Wall’ Problem

Sandisk Corp. (NASDAQ:SNDK) stock rose more than 1% in Monday’s premarket trading as risk appetite improved across the broader market. Nasdaq futures gained 0.91%, while S&P 500 futures rose 0.62%. Sandisk shares remain in a powerful longer-term uptrend after gaining more than 1,600% over the past 12 months. Data Center Demand Reshapes NAND Market Sandisk recently said artificial intelligence inference is reshaping the NAND flash market, with data centers now accounting for more than half of industry demand. Speaking at the Goldman Sachs Communacopia + Technology Conference, Sandisk executives said larger AI models and longer context windows are increasing the need for scalable storage. Technologies such as retrieval-augmented generation and KV cache are also expanding NAND’s role in AI infrastructure. Sandisk said it has spent the past several years expanding its enterprise SSD portfolio. The company believes that investment positions it to benefit as data center demand becomes a larger share of the NAND market. Chief Executive David Goeckeler said the shift toward data centers is also changing how customers buy NAND. Large cloud and data center operators increasingly want predictable supply rather than quarterly price negotiations. Sandisk has responded by moving more of its future supply into longer-term agreements. The company said customers receive greater supply certainty, while Sandisk gains better visibility into future demand. Chief Financial Officer Luis Visoso said Sandisk has signed eight strategic agreements, some covering requirements for as long as five years. The contracts can include fixed-price periods, upside participation, downside protection and third-party financial guarantees. High Bandwidth Flash Targets AI Inference Sandisk is also developing High Bandwidth Flash, or HBF, for AI inference workloads. Goeckeler said artificial intelligence is increasingly running into a "memory wall" as models grow larger and inference workloads demand more capacity. He said the company sees an opportunity to use its NAND expertise and High Bandwidth Flash technology to help address that bottleneck by combining greater storage density with higher bandwidth and durability. Goeckeler said HBF is not designed to replace high-bandwidth memory, or HBM. Instead, Sandisk aims to combine NAND’s density with higher bandwidth and durability to address memory constraints as inference workloads scale. The company plans to place HBF samples with customers next year. Sandisk also reiterated its longer-term financial model, which includes an 80% gross margin target and a 50% free cash flow margin. The company continues to favor share repurchases over dividends for returning cash to shareholders. See More: Top Value Stocks Technical Analysis Sandisk remains well above its major moving averages. The stock is about 14% above its 20-day simple moving average of $1,591.42. It is also nearly 70% above its 200-day SMA of $1,068.24. That keeps the longer-term trend bullish. However, the extended move could also leave the stock vulnerable to sharper pullbacks. Momentum has improved. The MACD is above its signal line, while the histogram remains positive. That suggests selling pressure has eased following the previous downswing. The stock peaked near its 52-week high in June before reaching a swing low in July. Traders will now watch whether the latest rebound can establish a higher low. Near-term resistance sits around $1,828. Support is near $1,514.50, close to the 50-day SMA of $1,504.20. Analyst Outlook Sandisk has a Buy consensus rating and an average price forecast of $2,282.69. Mizuho maintained an Outperform rating on Aug. 25 but lowered its price forecast to $1,875. RBC Capital raised its price forecast to $1,600 on Aug. 14 while maintaining a Sector Perform rating. Wells Fargo raised its forecast to $1,550 while keeping an Equal-Weight rating. Benzinga Edge Rankings Sandisk has a Momentum score of 99.85 in Benzinga Edge Rankings, reflecting strong relative price performance. Its Value score stands at 8.98. The stock currently trades at about 24.3 times earnings. The technical setup remains momentum-driven. However, traders may watch $1,828 as near-term resistance and the $1,514.50 area as an important support level. ETF Exposure Sandisk is a major holding in several exchange-traded funds. The First Trust US Equity Opportunities ETF (NYSE:FPX) has an 8.82% weighting, while the Invesco S&P 500 Pure Growth ETF (NYSE:RPG) has an 8.02% weighting. The Invesco Dorsey Wright Technology Momentum ETF (NASDAQ:PTF) carries a 5.43% weighting. Large fund inflows or outflows could therefore contribute to trading activity in Sandisk shares. Price Action SNDK Price Action: Sandisk shares were up 1.24% at $1,814 in Monday’s premarket session, according to Benzinga Pro data. Photo via Shutterstock Read Also: China’s CXMT Says It Has Reached Advanced DRAM Mass Production, Challenging Samsung, SK Hynix and Micron in Memory Chips