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02-03 13:18

The recent upgrade of SanDisk's target price by Citigroup is a significant development, especially given the current market environment. Let's analyze the implications of this news and the potential for the AI trade.


1. AI-Driven Compute Demand: A Key Driver

The accelerating demand for AI-driven compute solutions is a positive sign for SanDisk:

Storage Cycle: The storage cycle is being propelled by the increasing demand for AI-driven compute solutions, which requires high-performance storage.

SanDisk's Position: SanDisk's emergence as a key pure-play gauge for NAND and SSD momentum after its spinoff positions it well to benefit from this trend.


2. Crowded Trade or Under-Owned?

The question remains whether the AI trade is crowded or under-owned:

Crowded Trade: The recent surge in SanDisk's stock price, as well as the upgrades from Citigroup, may indicate that the AI trade is becoming crowded.

Under-Owned: However, the fact that SanDisk's stock price is still below its pre-spinoff levels suggests that the AI trade may still be under-owned.


3. Factors Supporting Further Upside

Several factors support the potential for further upside in SanDisk's stock price:

Margin Resilience: SanDisk's ability to maintain its margins despite the increasing demand for its products is a positive sign.

Data-Center Revenue: The 64% QoQ surge in data-center revenue is a testament to the growing demand for SanDisk's products in the data-center market.

Hyperscaler Demand: The accelerating demand from hyperscalers is a key driver of SanDisk's growth, and this trend is expected to continue.


4. Risks and Challenges

While the outlook for SanDisk is positive, there are risks and challenges to consider:

Competition: The storage market is highly competitive, and SanDisk faces competition from other established players and new entrants.

Supply Chain Risks: Disruptions to the supply chain, particularly in the NAND and SSD markets, can impact SanDisk's ability to meet demand.

Regulatory Environment: Changes in the regulatory environment, particularly in the data-center market, can impact SanDisk's business.


5. Conclusion

The recent upgrade of SanDisk's target price by Citigroup is a positive development that reinforces the company's position as a key player in the AI-driven compute solutions market. While there are risks and challenges to consider, the factors supporting further upside in SanDisk's stock price are compelling.

Citi Lifts SanDisk to $750: Is the AI Trade Crowded?
AI-driven compute demand continues to propel the storage cycle, with SanDisk emerging as a key pure-play gauge for NAND and SSD momentum after its spinoff. On Monday, Citigroup raised SanDisk’s target price from $490 to $750, citing margin resilience and a 64% QoQ surge in data-center revenue as hyperscaler demand accelerates. Shares jumped 15.4%, lifting peers Micron Technology (+5.5%) and Western Digital (+6.1%). With targets racing higher, is AI storage still under-owned—or nearing peak expectations? Would you chase or take profits now?
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

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