When investors dumped software stocks that sold subscriptions (known as SaaS), storage chip stocks rose. In the former, stocks like Autodesk (ADSK), Adobe (ADBE), Salesforce (CRM), and Intuit (INTU) continued to fall last week.
Sandisk (SNDK) bucked that trend. It gained nearly 22% in only a week and is up by 1243% in just half a year. Western Digital (WDC) and Seagate (STX) also rewarded investors.
Sandisk jumped after posting a 61.2% Y/Y increase in revenue. Non-GAAP EPS was $6.20. In the third quarter, the firm is forecasting revenue of $4.4 billion to $4.8 billion. CEO David Goeckeler attributed the growth to artificial intelligence markets. It drove a change in demand. Edge workloads for complex tasks increased, lifting data center investments. NAND is indispensable to global storage needs.
Sandisk is qualifying PCIe Gen5 TLC drives. Hyperscalers will use those top-end products.
In the consumer market, the CEO said that it launched an extreme USB-C flash drive.
Outlook
Sandisk is careful with its allocation of goods. It is monitoring the supply-demand dynamics.
The firm's balance sheet is healthy. It held $1.53 billion in cash, compared to $603 million in debt. It applied its free cash flow growth by paying down $750 million in debt in the third quarter.
Your Takeaway
Demand for NAND-type chips will continue through 2027. Data centers and chips for cache are the primary drivers.
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