Goldman Sachs directly doubled the target price for Sandisk! The shortage of NAND will greatly boost pricing power and profit margin growth

Wallstreetcn
2025.11.10 06:12
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Goldman Sachs raised the target price for Sandisk to $280, stating that the supply-demand imbalance in the NAND flash memory market will continue until 2026, granting manufacturers strong pricing power, which will ultimately be reflected in soaring profit margins. The average EPS forecast for 2025-2027 has been raised by 79%. The demand for AI servers leading to capacity constraints is a key factor in the supply-demand imbalance, and the market has not yet fully digested the profit explosion potential of this super cycle

Author: Dong Jing

Source: Hard AI

Goldman Sachs has aggressively raised the target price for SanDisk, believing that the NAND flash memory market will continue to experience a supply-demand imbalance until 2026, and the pricing power and profit margin explosion potential brought by this super cycle have not yet been fully digested by the market.

On November 10th, according to Hard AI, Goldman Sachs stated in its latest research report that SanDisk's Q3 performance significantly exceeded expectations, becoming a direct catalyst for boosting market confidence.

Goldman Sachs indicated that behind the strong performance is a fundamental reversal in the NAND flash memory market's fundamentals, the NAND flash memory market is entering a sustained and severe supply-demand imbalance phase, which is expected to last until 2026.

The research report pointed out that this means that NAND manufacturers represented by SanDisk will have significant pricing power, and their gross margins and profitability will experience explosive growth. Goldman Sachs has significantly raised its earnings forecast, believing that the market has not yet fully digested the potential of this super cycle.

Analysts pointed out that in addition to SanDisk's recent performance and guidance far exceeding expectations, the overall price surge in the flash memory market provides strong evidence for Goldman Sachs' optimistic judgment. Goldman Sachs has doubled SanDisk's target price from $140 to $280, which leaves a 16% upside potential from the current stock price level, and maintains a "Buy" rating.

Performance and Guidance Both Explode

The research report stated that SanDisk's latest announced performance and outlook are the direct catalysts for boosting market confidence. The financial report shows that the company's Q3 2025 performance significantly exceeded market expectations:

  • Revenue: Recorded $2.31 billion, higher than Goldman Sachs' forecast of $2.21 billion and the market's general expectation of $2.17 billion.

  • Gross Margin: Reached 29.9%, also higher than the market expectation of 29.3%.

  • Non-GAAP Earnings Per Share (EPS): $1.22, significantly exceeding the market expectation of $0.90, with a deviation of up to 35.6%.

Goldman Sachs emphasized in the report that even more shocking is its guidance for Q4 2025, with all indicators far exceeding previous expectations:

  • Revenue Guidance: The median is $2.60 billion, while the market expectation is only $2.37 billion.

  • Gross Margin Guidance: The median is as high as 42.0%! This not only far exceeds the Q3 figure of 29.9% but also crushes the market expectation of 33.5%, exceeding by a full 850 basis points.

  • Non-GAAP EPS Guidance: The median is $3.20, while the market expectation is only $1.92, nearly 1.7 times the expectation.

Goldman Sachs believes that these data clearly indicate that SanDisk's profit inflection point has arrived, and its growth slope is much steeper than the market imagines.

NAND Supply Shortage Becomes a Foregone Conclusion

Behind the strong performance is a fundamental reversal in the entire NAND industry's fundamentals.

Goldman Sachs emphasized in its report that SanDisk's management now believes that the supply shortage in the NAND industry will persist throughout 2026, given the cautious control of supply growth by industry participants.

This judgment is highly consistent with market observations. Due to the surge in demand for high-end memory such as DDR5 and HBM from AI servers, major chip manufacturers are prioritizing capacity allocation to these high-margin products. This has directly led to a shortage of NAND flash memory and DDR4 memory for consumer-grade SSDs and mainstream devices.

Recent media reports also confirm this: Wall Street Watch previously mentioned that according to DigiTimes Asia, SanDisk has significantly raised its contract prices for NAND flash memory in November by 50%, and DRAM memory prices have soared by 171.8% year-on-year, with giants like Samsung and SK Hynix only able to fulfill about 70% of orders.

Goldman Sachs believes that as long as competitors in the NAND market maintain supply discipline, the upward trend in prices will continue, and this orderly supply-demand pattern is the most critical factor supporting the sustained rise in SanDisk's stock price and profit margins.

The research report states that the supply shortage directly translates into pricing power, ultimately reflected in soaring profit margins.

Goldman Sachs pointed out that SanDisk's guidance for a gross margin of 42.0% in the fourth quarter is primarily driven by higher product pricing. Looking ahead, with the combined effects of pricing momentum and a better product mix (such as high-margin enterprise SSDs), gross margins will continue to expand.

Based on this, Goldman Sachs has significantly raised its earnings forecasts for SanDisk. The report shows that Goldman Sachs has raised its EPS forecast for SanDisk over the next few years by an average of 79%:

  • 2025 EPS forecast: Raised from $2.88 to $4.86, an increase of 69.2%.

  • 2026 EPS forecast: Raised from $10.35 to $19.00, an increase of 83.6%.

  • 2027 EPS forecast: Raised from $12.57 to $23.25, an increase of 85.0%.

This exponential growth in profit expectations is the core financial basis supporting Goldman Sachs' doubling of the target price.

Target Price Doubled to $280, Valuation Logic Reshaped

Based on the above optimistic judgment, Goldman Sachs has raised its 12-month target price for SanDisk from $140 to $280, achieving a doubling. This adjustment is based on changes in two key factors:

  1. Earnings Base (EPS) Adjustment: Goldman Sachs has significantly raised its "normalized EPS" used for valuation from $7.80 to $14.00 to reflect the latest revenue and profit margin assumptions.

  2. Valuation Multiple (P/E) Increase: Considering the general increase in valuation levels of peer companies, Goldman Sachs has raised the price-to-earnings ratio applied to SanDisk from 18 times to 20 times Goldman Sachs believes that although market expectations have warmed up, SanDisk's pricing and profit margins will continue to rise in the coming quarters. At the same time, the company is expected to gain more market share in the enterprise SSD (eSSD) market.

Given the significant upside potential of its performance relative to the market's general expectations, Goldman Sachs firmly believes that a "buy" rating is justified

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