Citi reiterated its Buy rating on SanDisk with a $2,500 price target, leaning on long-term contracts with cloud vendors that cover most of the company's NAND output over the next two years. Those agreements come with roughly $94 billion in minimum revenue commitments and strong gross margin protection. The chipmaker's latest earnings were solid, but its shares dropped after the release. The decline reflects market concerns that AI-driven NAND price increases may be losing pace and that current high margins might not last. In Citi's view, the contracted revenue base, combined with growing demand for AI inference in data centers, supports a higher valuation, leading the bank to stay with its Buy call.
Citi stuck with its Buy rating on SanDisk and left its $2,500 price target unchanged, pointing to long-term deals with cloud providers that tie up most NAND shipments for the next two years. Those contracts come with about $94 billion in minimum revenue commitments and give the company solid gross-margin protection.
The company's latest earnings report came in strong. But the stock still fell afterward, showing investors are worried that AI-fueled NAND price gains may be losing steam and that elevated margins may be tough to keep up. Citi says the contracted demand pipeline, together with growing AI inference workloads in data centers, supports the case for a higher valuation.
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