SanDisk Soars Amidst Unprecedented Chip Scarcity

SanDisk's stock experienced a significant 24% jump, extending its rally to an impressive 1,755% since its debut. This surge is largely attributed to the escalating demand for memory technology fueled by artificial intelligence.

The company reported fiscal second-quarter results that far surpassed both market expectations and its own guidance. Despite generating over $3 billion in revenue, SanDisk is unable to meet current demand, a situation expected to persist through 2026. This imbalance between supply and demand creates a "choke point" in the technology sector.

While major corporations like Apple may face moderate impacts from rising memory prices, with an estimated 50% jump in DRAM prices for 2026 potentially reducing gross margins by 90 basis points, individual consumers are bracing for more severe consequences. The gap between contract prices and spot prices for memory, particularly DDR5 and DDR4 RAM, has widened considerably.

Analysts predict that this favorable supply-demand environment for memory manufacturers will continue through at least 2027. SanDisk's management, committed to disciplined capital allocation, is prioritizing long-term demand sustainability over aggressive capacity expansion. This strategic approach, coupled with the persistent scarcity, suggests that memory prices are unlikely to stabilize soon, with potentially more painful increases yet to come for end users.