Sandisk Rode an Estimated 70% Jump in NAND Prices. TrendForce Sees 10% to 15% This Quarter.

TrendForce projects NAND flash contract prices rising 70%-75% in the spring quarter, then decelerating to 10%-15% in the current quarter. Sandisk reported fiscal Q4 revenue of $8.97B (+51% sequential, +372% YoY) with gross margin surging to 84.6% (from 26.2% a year earlier), and management said ~two-thirds of the sequential growth came from higher pricing. For the fiscal first quarter, Sandisk guided adjusted gross margin of 83%-85% and EPS of $44-$46 (up from $39.25), while acknowledging the deceleration implies a need to rebuild earnings assumptions as price growth flattens.

Analysis

The market is likely underestimating how quickly a memory stock can re-rate once the slope of pricing changes, even if absolute prices are still rising. SNDK’s earnings power is now less about “are NAND prices up?” and more about whether the market continues to pay for an unusually steep margin regime; once the rate of change normalizes, multiple compression can begin before the P&L actually rolls over.

The near-term winners are the customers that were forced to defer purchases: PC, smartphone, and enterprise-storage OEMs should get some relief in 1-3 months if pricing growth keeps slowing, which could stabilize unit demand and reduce cancellation risk. The losers are the pure-play memory names most exposed to NAND ASPs; by contrast, diversified AI semis like NVDA are better insulated because their demand is tied to capex and compute cycles, not a single commodity price curve.

The key contrarian point is that this is not a classic memory downcycle yet. Contract coverage and lack of meaningful supply relief through 2027 materially reduce trough-risk, so the bear case is more about estimate resets than balance-sheet stress. That argues for a relative-value short, not a naked collapse trade: if subsequent channel checks show pricing flattening faster than expected, SNDK’s forward EPS will get marked down faster than the stock can absorb at a 7-8x multiple.

Key Decisions for Investors

• Short SNDK on strength or buy 3-6 month put spreads to express the view that estimate revisions lag the pricing slowdown; best entry is into any relief rally after guidance. Risk/reward is attractive if the market starts discounting 2027 margin normalization before street models do.
• Pair trade: long MU / short SNDK over the next 1-3 months. MU should benefit more from AI-driven memory tightness via DRAM/HBM, while SNDK is the cleanest hedge against NAND ASP deceleration.
• If already long SNDK, hedge with a collar or reduce exposure ahead of the next earnings cycle; the thesis breaks if sequential pricing remains above the low-teens and gross margin stays above 83% for another quarter.
• Prefer NVDA over SNDK for AI exposure on any memory-sector pullback. NVDA has second-order upside from datacenter capex without the commodity-price risk embedded in NAND.