Goldman Sachs has directly doubled SanDisk's target price! NAND supply shortage will greatly boost pricing power and profit margin growth.

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Author of this article: Dong Jing

Source: Hard AI

Goldman Sachs has aggressively raised SanDisk’s target price, believing the NAND flash market will continue to be in short supply until 2026, and that the explosive potential in pricing power and profit margins brought by this super cycle has not yet been fully digested by the market.

On November 10, according to Hard AI, Goldman Sachs stated in its latest research report that SanDisk’s Q3 performance far exceeded expectations, becoming the direct trigger for a surge in market confidence.

Goldman Sachs said that behind the strong performance is a fundamental reversal in the basics of the NAND flash market. The NAND flash market is entering a sustained and severe supply shortage stage, which is expected to last until 2026.

The report points out that this means that NAND manufacturers led by SanDisk will have significant pricing power, and their gross margin and profitability will see explosive growth. Goldman Sachs has sharply raised its profit forecasts, believing the market has not fully absorbed the potential of this super cycle.

Analysis indicates, aside from SanDisk’s recent unexpectedly strong performance and guidance, the overall flash memory price surge in the market provides strong support for Goldman Sachs’ optimistic assessment. Goldman Sachs doubled SanDisk’s target price from $140 directly to $280, with a 16% upside from its current stock price, and maintained a “Buy” rating.

Performance and Guidance Both Explode Higher

The report states that the latest performance and outlook released by SanDisk directly triggered a surge in market confidence. The financial report shows that for the third quarter of 2025, the company's results greatly exceeded market expectations:

Revenue: Recorded at $2.31 billion, higher than Goldman Sachs’ forecast of $2.21 billion and the market’s consensus 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, far exceeding the market expectation of $0.90—a 35.6% increase.

Goldman Sachs emphasized in its report that even more shocking is its guidance for the fourth quarter of 2025, with all key metrics far exceeding previous expectations:

Revenue Guidance: Median of $2.60 billion, while market expectation was only $2.37 billion.Gross Margin Guidance: Median reaches an amazing 42.0%! This is not only far above the Q3 figure of 29.9%, but also crushes the market expectation of 33.5%, an increase of 850 basis points.Non-GAAP EPS Guidance: Median of $3.20, while market expectation was only $1.92—almost 1.7 times the expectation.

Goldman Sachs thinks these figures clearly show that SanDisk’s profitability inflection point has arrived, and its growth rate is much steeper than the market imagined.

NAND Supply Shortage Has Become a Reality

Behind the strong performance is a fundamental reversal in the basics of the entire NAND industry.

Goldman Sachs emphasized in the report that SanDisk management now believes with all industry participants cautiously controlling supply growth, the supply shortage in the NAND industry will persist through all of 2026.

This judgment is highly consistent with market observations. Due to surging demand for DDR5 and HBM high-end memory in AI servers, major chip manufacturers are prioritizing capacity allocation for these higher-margin products. This directly leads to shortages of NAND flash and DDR4 memory used in consumer SSDs and mainstream devices.

The latest media coverage confirms this as well: Wallstreetcn previously mentioned, according to DigiTimes Asia, SanDisk has raised contract prices for NAND flash by as much as 50% in November, DRAM memory prices have soared 171.8% year-over-year, and giants like Samsung and SK Hynix can only fulfill about 70% of orders.

Goldman Sachs believes as long as competitors in the NAND market continue to maintain supply discipline, the upward trend in prices will persist, and this orderly supply-demand structure is the key factor supporting SanDisk’s sustained rise in stock price and margins.

The report states, supply shortages directly translate into pricing power, ultimately reflected in soaring profit margins.

Goldman Sachs points out SanDisk’s Q4 42.0% gross margin guidance is mainly driven by higher product prices. Looking ahead, with strong pricing momentum and an improved product mix (such as high-margin enterprise SSDs), gross margin will continue expanding.

Based on this, Goldman Sachs has radically upgraded its profit forecasts for SanDisk. The report shows Goldman Sachs has on average raised its EPS forecasts for the next few years by 79%:

2025 EPS Forecast: Raised from $2.88 to $4.86, up 69.2%.
2026 EPS Forecast: Raised from $10.35 to $19.00, up 83.6%.
2027 EPS Forecast: Raised from $12.57 to $23.25, up 85.0%.

This exponential growth in profit expectations forms the core financial underpinning for Goldman Sachs doubling its target price.

Target Price Doubled to $280; Valuation Logic Reshaped

Based on these optimistic assumptions, Goldman Sachs raised its 12-month target price for SanDisk from $140 to $280, a 100% increase. This revision is based on two key changes:

EPS base raised: Goldman Sachs sharply increased its “Normalized EPS” used for valuation from $7.80 to $14.00 to reflect the latest assumptions for revenue and gross margin.
Valuation Multiple (P/E) Upgraded: In light of peers’ valuation levels trending higher, Goldman Sachs raised SanDisk’s applied P/E ratio from 18x to 20x.

Goldman Sachs believes that although market expectations have heated up, SanDisk’s pricing and profit margin will continue to increase over the next several quarters. At the same time, the company is expected to gain more share in the enterprise SSD (eSSD) market.

Given its huge upside relative to the market consensus, Goldman Sachs firmly holds that a “Buy” rating is justified.

This article comes from WeChat official account “Hard AI”. For more cutting-edge AI news, please visit here.

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