SanDisk stock jumps 5% premarket: can Nvidia’s memory warning extend the rally?

SanDisk stock NASDAQ:SNDK jumped nearly 5% in Thursday premarket trading after Nvidia’s earnings delivered an unexpected positive signal for memory suppliers.

SNDK closed Wednesday at $1,499.37, up 1.3%, then rose 3.7% after hours before extending gains.

Nvidia said memory shortages are limiting how quickly it can satisfy demand and pressuring gross margins.

That is the fundamental logic behind Thursday’s sharp rebound.

Nvidia’s memory problem could become SanDisk’s opportunity

Nvidia expects demand to keep accelerating, but finance chief Colette Kress warned that soaring memory prices and higher component costs will pressure margins.

The chip giant expects adjusted gross margin to fall from about 75% in fiscal Q2 to 74% in Q3, then bottom around 71%-72% in Q4.

Investing.com analyst Thomas Monteiro told MarketWatch that memory inflation is “mostly cyclical,” but added that such cycles have a “habit of lasting longer than expected.”

With few major memory producers controlling supply, manufacturers retain substantial pricing power.

That is the direct SanDisk read-through. Stronger NAND pricing can support revenue and margins even as those costs squeeze customers buying memory-intensive AI systems.

Thursday’s move therefore reflects more than Nvidia sympathy. Investors are treating Nvidia’s warning as evidence that tight industry conditions may persist longer than assumed.

Wall Street sees AI changing the old NAND cycle

Bernstein analyst Mark Newman recently called SanDisk’s High Bandwidth Flash technology a “game changer for AI and the memory industry” and maintained an Outperform rating with a $3,000 target.

Newman argues HBF could require three to four times more factory space per exabyte than conventional NAND, potentially consuming wafer capacity and causing shortages to last “far longer than even the bulls expect.”

JPMorgan analyst Harlan Sur resumed coverage with an Overweight rating and a December 2027 target of $2,250.

Sur said SanDisk is “uniquely positioned” to benefit from the structural increase in NAND demand driven by AI inference.

He also highlighted eight long-term customer agreements representing about $94 billion in total contract value at floor pricing.

Those contracts could provide more earnings visibility than investors historically associate with commodity memory producers.

A rally is easier than proving the shortage will last

The risk is that memory remains cyclical because strong pricing encourages more investment.

SanDisk closed at $1,499.37 on Wednesday after trading above $1,825 earlier this month and below $1,000 in late July, illustrating how violently expectations can shift.

SanDisk and Kioxia said they plan to invest more than $31 billion in Japan through 2032 to expand semiconductor technology and production capacity as AI demand rises.

The programme depends partly on Japanese government support.

New capacity gives SanDisk more ability to capture AI growth, but it also creates the longer-term question investors cannot ignore: could supply eventually expand faster than demand?