Goldman Sachs has aggressively raised its price target for SanDisk, predicting that the NAND flash memory market will remain undersupplied until 2026. The firm believes the market has yet to fully price in the potential for pricing power and margin expansion driven by this supercycle.
On November 10, Goldman Sachs highlighted in its latest research report that SanDisk's Q3 earnings significantly exceeded expectations, serving as a catalyst for renewed market confidence. The bank noted that this strong performance reflects a fundamental reversal in the NAND flash market, which is entering a prolonged and severe supply shortage phase expected to last through 2026.
The report emphasized that SanDisk and other NAND manufacturers will gain substantial pricing power, leading to explosive growth in gross margins and profitability. Goldman Sachs has sharply raised its earnings forecasts, arguing that the market has not fully accounted for the potential of this supercycle. The bank doubled SanDisk's price target from $140 to $280, implying a 16% upside from current levels, while maintaining a "Buy" rating.
**Earnings and Guidance Exceed Expectations** SanDisk's latest results and outlook were described as a key confidence booster. The company reported Q3 2025 earnings that surpassed all market estimates:
- **Revenue**: $2.31 billion, above Goldman's $2.21 billion forecast and the consensus estimate of $2.17 billion. - **Gross Margin**: 29.9%, exceeding the market's 29.3% expectation. - **Non-GAAP EPS**: $1.22, significantly beating the $0.90 consensus by 35.6%.
Goldman Sachs also highlighted SanDisk's Q4 2025 guidance, which far exceeded prior expectations: - **Revenue Guidance**: Midpoint of $2.6 billion, versus the $2.37 billion consensus. - **Gross Margin Guidance**: Midpoint of 42.0%, up from Q3's 29.9% and well above the 33.5% consensus. - **Non-GAAP EPS Guidance**: Midpoint of $3.20, nearly 1.7x the $1.92 consensus.
The bank concluded that these figures confirm an inflection point in SanDisk's profitability, with growth accelerating faster than anticipated.
**NAND Shortage Becomes Structural** The strong performance reflects a fundamental shift in the NAND industry. SanDisk's management now expects undersupply to persist through 2026, as major players maintain disciplined capacity expansion.
This aligns with broader market observations. Surging demand for AI server components like DDR5 and HBM has led chipmakers to prioritize high-margin products, tightening supply for consumer SSDs and mainstream NAND flash. Recent reports indicate SanDisk raised November NAND contract prices by 50%, while DRAM prices surged 171.8% year-over-year. Industry giants like Samsung and SK Hynix can only fulfill about 70% of orders.
Goldman Sachs believes sustained pricing discipline among competitors will prolong the upward trend in NAND prices, supporting SanDisk's margins and stock performance. The bank noted that SanDisk's projected 42.0% Q4 gross margin is primarily driven by higher pricing, with further expansion expected from premium product mixes like enterprise SSDs.
**Earnings Forecasts Sharply Revised** Goldman Sachs raised its EPS estimates for SanDisk by an average of 79%: - **2025 EPS**: Increased from $2.88 to $4.86 (+69.2%). - **2026 EPS**: Raised from $10.35 to $19.00 (+83.6%). - **2027 EPS**: Upped from $12.57 to $23.25 (+85.0%).
This exponential earnings growth underpins the bank's decision to double the price target.
**Price Target Doubled to $280 on Revised Valuation** Goldman Sachs' new $280 target reflects two key adjustments: 1. **Higher Earnings Base**: "Normalized EPS" used for valuation rose from $7.80 to $14.00, incorporating updated revenue and margin assumptions. 2. **Higher P/E Multiple**: The applied multiple increased from 18x to 20x, reflecting peer valuation trends.
The bank maintains that SanDisk's pricing power and margins will continue rising, with additional market share gains in enterprise SSDs. Given the significant upside to consensus estimates, Goldman Sachs reaffirms its "Buy" rating.
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