A hardware company spun off from its parent just 14 months ago saw its stock soar from $40 to over $1,000—nearly a 30-fold gain. This is not an AI startup's valuation, but SanDisk, trading on Nasdaq.
On April 27, Melius Research analyst Ben Reitzes initiated coverage on both SanDisk and Micron with Buy ratings, setting two-year price targets of $1,350 and $700 respectively, implying 36% and 41% upside from current levels.
Memory Makers Shift From Cyclical to Long-Contract Visibility
Reitzes argues that the memory industry's business model is being rewritten. Historically, DRAM and NAND prices fluctuated like commodities, leaving manufacturers profitable one year and losing money the next.
Now, hyperscale cloud providers like Meta, Google, Microsoft, and Amazon are signing multi-year supply agreements with memory makers, including floor prices and prepayment arrangements, locking in HBM and NAND capacity for 3–5 years.
Reitzes dubs this a 'reverse SaaS' model: while traditional SaaS firms suffer from usage-based billing eroding margins, memory makers are securing high-margin, long-term contracts with far better revenue visibility. This transforms them from cyclical commodity players into high-visibility stocks with a 'moat' of long-term deals.
HBM Frenzy Drains DRAM Supply
The change is driven by AI GPU's insatiable appetite for HBM (High Bandwidth Memory). Over 95% of global DRAM capacity is controlled by Samsung, SK Hynix, and Micron. These three have shifted about 23% of their wafer capacity from general-purpose DRAM to HBM production.
SK Hynix commands roughly 62% of the HBM market, with nine-tenths of its output going directly to Nvidia. HBM3E prices have risen nearly 20% this year, and HBM4 is slated for mass production in the second half. The knock-on effect: severe shortages in general DRAM, with consumer DDR5 pricing doubling since the start of 2025.
AI has turned memory into a 'can't-get-enough' strategic asset. Given the industry's historical cyclicality, analysts setting two-year price targets signals that this rally may run longer than any previous boom.