Key Takeaways
- Bernstein’s Mark Newman elevated his SanDisk price target from $1,700 to $3,000, establishing the highest target among Wall Street analysts.
- This bullish stance follows a roughly 12% decline in SNDK shares across two sessions, triggered by concerns about AI infrastructure spending linked to OpenAI financing discussions.
- According to Newman, recently negotiated long-term supply contracts provide SanDisk with enhanced downside protection compared to traditional industry agreements.
- The firm increased its fiscal 2027 and 2028 EPS projections to $243 and $272 respectively under its base scenario.
- While SNDK maintains a Strong Buy consensus among analysts, the average price target trails the current trading price.
SanDisk stock (SNDK) has experienced significant volatility in recent sessions. The shares tumbled approximately 12% across two consecutive trading days following reports that OpenAI is exploring additional financing avenues to support upcoming AI infrastructure initiatives. This development sent shockwaves through semiconductor stocks, with SanDisk among the casualties.
Yet Bernstein’s Mark Newman remains firmly in the bull camp. The analyst recently increased his price target on SanDisk from $1,700 to $3,000, marking one of the most aggressive forecasts currently circulating on Wall Street. Newman maintained his Outperform rating on the stock.
Ranked in the top 1% of Wall Street analysts by TipRanks, Newman contends that market participants continue to undervalue the fundamental transformation occurring within the memory chip industry.
The Foundation of Newman’s Optimistic Outlook
Newman’s thesis revolves primarily around the evolution of long-term supply contracts. Historical agreements typically favored buyers during price downturns. The current generation of contracts presents a markedly different structure.
These updated agreements feature fixed or range-bound pricing mechanisms, upfront financial obligations, and extended terms spanning three to five years. Newman contends this framework substantially reduces downside exposure, though it doesn’t eliminate the cyclical characteristics inherent to the memory business.
He also challenged a prevalent misconception regarding these contracts. Many Wall Street analysts interpret the upfront financial commitments as static safeguards. Newman argues their protective power actually intensifies as contracts progress, since the outstanding delivery requirement decreases while the initial commitment remains constant.
“We believe this is not understood by the Street,” he noted, explaining that the structure provides enhanced protection in later stages, “when it is more likely to be needed.”
Using SanDisk’s latest agreements as a reference point, Newman calculates the price floor at approximately $0.29 per gigabyte. This figure aligns closely with his current average selling price projection for the company.
He included an important qualifier. These extended supply agreements “do not completely remove risk of future downcycles,” yet they “do significantly alleviate downside risk.” Newman calculates that even during a price deterioration exceeding historical industry downturns, approximately 60% of anticipated volumes would remain shielded by long-term agreement coverage.
Financial Projections Supporting the Thesis
Newman revised his earnings estimates upward to reflect his increased confidence. His base-case scenario now anticipates fiscal 2027 earnings per share of $243 and fiscal 2028 earnings per share of $272.
His optimistic scenario projects even higher figures, reaching $350 for fiscal 2027 and $400 for fiscal 2028. These numbers incorporate his belief that current pricing dynamics will persist longer than consensus expectations suggest.
Newman contends the market hasn’t adequately incorporated the valuation implications of these structural changes. “Lower volatility and higher sustainability of earnings are worth a higher PE,” he stated, emphasizing that reduced downside risk to earnings “is not being factored into current multiples.”
Wall Street broadly shares the positive sentiment, though with less intensity. SNDK carries a Strong Buy consensus rating comprising 14 Buy recommendations and 2 Hold ratings.
The consensus 12-month price target among analysts stands at $1,954.38. That figure represents approximately 5% below current trading levels, suggesting many analysts haven’t yet adjusted for SanDisk’s remarkable performance this year.
SanDisk shares have surged 764% year to date. Newman’s $3,000 target currently represents one of the most bullish projections available on Wall Street.
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