Key Points
While memory stocks continue to run hot, expectations are high heading into Micron’s earnings report.
Sandisk already confirmed that the NAND side of the AI memory boom still has room to run.
If demand for DRAM and high bandwidth memory remains strong, Sandisk stock could be set up for a pop following Micron’s earnings report.
- 10 stocks we like better than Sandisk ›
One of the most talked-about themes in artificial intelligence (AI) right now is the memory supercycle. It is the entire reason why Sandisk (NASDAQ: SNDK) and Micron Technology (NASDAQ: MU) trade like they are glued together.
One company is the NAND flash specialist that came out of a spinoff from Western Digital, while the other is the DRAM and high bandwidth memory (HBM) heavyweight.
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Together, Sandisk and Micron sit on opposite sides of the same coin: storage that holds data and memory that feeds GPUs. When one reports a blowout quarter, the other tends to follow. That is why Micron’s earnings on Sept. 30 matter for Sandisk investors. A strong print would not just lift Micron stock; it would confirm that the memory trade still has room to run.
Image source: The Motley Fool.
Sandisk already showed the memory boom is intact on the NAND side
Sandisk just finished its first full year as a stand-alone public company. Frankly, the numbers look slightly unreal.
Revenue for the full year reached $20.25 billion, up 175% year over year. During the fourth quarter alone, Sandisk brought in $8.9 billion, up 372% from a year earlier and 51% sequentially. Pricing power did most of the heavy lifting. Management said roughly two-thirds of the jump came from higher average selling prices, not just more shipments.
The real story sits inside the company’s data center segment. That slice went from a rounding error to a quarter of the business in a year. Data center revenue reached $2.9 billion in the fourth quarter, more than double the prior quarter and up barely 1,300% year over year. For the full year, the data center segment grew 437% to $5.2 billion. While edge products still make up the biggest piece of sales, data center is where the mix is shifting and the margins are becoming juiciest.
The New Business Model agreements are what make Sandisk’s runway look more lucrative than that of a typical memory cycle. Sandisk now has eight of these multiyear supply deals at floor pricing of $93.9 billion in expected revenue over the life of the contracts.
Remaining performance obligations (RPO) sit at around $91.1 billion once deals signed after quarter-end are included. These deals are not a result of memory’s traditional spot-market story. Instead, Sandisk is now in the driver’s seat and able to command booked demand stretching years into the future.
The biggest memory buyers just confirmed they will keep paying a premium
The last earnings season was unusually consistent around the state of memory. Tim Cook, Elon Musk, Jensen Huang, and Andy Jassy all talked about memory pricing at length.
Cook described the current dynamics of the memory market as a “100-year flood.” He noted that Apple paid more for memory in March than in December, then more again in June, and expects to pay even higher prices in the current September quarter.
Musk went further and actually specifically thanked Micron during Tesla’s call. He said the company gave Tesla a healthy allocation of bits on reasonable terms given the surging prices for DRAM and HBM.
Nvidia went as far as to quantify the memory bottleneck. The company said that its supply and capacity agreements will reach $267 billion through fiscal 2029, noting the increase is primarily related to locking in memory.
Amazon did something similar to Nvidia, raising its 2026 capital expenditures (capex) from $200 billion to about $220 billion. Andy Jassy pointed directly to higher memory costs for the rise in capex. What’s astounding is that even at that level, he said Amazon will not have enough capacity to meet all the demand this year or next.
Why a Micron beat is a green light for Sandisk
Wall Street is modeling a monster quarter for Micron. Consensus estimates sit around $50.8 billion in revenue and roughly $31 in earnings per share (EPS). This represents 350% year-over-year revenue growth and nearly an 11x increase in earnings.
MU Revenue Estimates for Current Quarter data by YCharts
The setup for a healthy beat is not hard to see. DRAM and NAND contract prices continue to climb, forcing the hyperscalers to keep raising capex. In turn, HBM remains sold out well into next year. I’m predicting that Micron will come in ahead of expectations, and reflect the same tightness that fueled Sandisk’s last quarter.
That is the linkage at play here. A Micron beat would be a signal to the market that the memory trade is not fading. Sandisk already verified one side of the story. When the other half of the memory complex confirms the same demand picture, investors could bid both names higher.
That is why Sept. 30 will be more than just another semiconductor earnings report. It is the next checkpoint on whether the memory boom still has legs, and why Sandisk stock could catch another catalyst if Micron confirms the answer is yes.
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Adam Spatacco has positions in Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Amazon, Apple, Micron Technology, Nvidia, Tesla, and Western Digital. The Motley Fool has a disclosure policy.
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