Why Did Sandisk Stock Pop Today?
Key Points
China appears to have passed on an opportunity to buy H200 artificial intelligence chips from Nvidia.
President Trump says China wants to develop its own chip industry instead, with potential implications for Nvidia -- and for Sandisk, too.
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Something strange is happening with Sandisk (NASDAQ: SNDK) stock today.
News that China passed on a Trump offer to permit Chinese tech giants to buy H200 artificial intelligence chips from Nvidia (Nasdaq: NVDA) shook Nvidia investor confidence on Friday, sending the semiconductor giant's shares down 3.2% through 12:40 p.m. ET.
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Micron (NASDAQ: MU), whose DRAM and NAND memory chips are essential to making Nvidia chips perform their best at the AI data centers in which they're installed, sank 5.4% on worries that if China's not buying Nvidia chips, it's not buying Micron chips, either.
But Sandisk stock did not follow Nvidia down. Sandisk stock is up 1.2% today. Why is that?
Image source: Getty Images.
Nvidia's news might be bad news for Sandisk
On the surface, Micron and Sandisk stocks moving in opposite directions makes no sense. True, Nvidia buys both DRAM and NAND memory chips from Micron, versus Sandisk, which provides only NAND memory. So I suppose one could argue Micron is doubly exposed to bad Nvidia news.
But Sandisk has all its eggs in the NAND basket. Because Nvidia still uses that basket to hold memory for its AI chips, I'd think bad news for Nvidia is still bad news for Sandisk, too.
What's next for Sandisk
But that's assuming today's China news is in fact bad news for Nvidia -- and I honestly don't think it is.
Yes, China may be holding off on buying Nvidia chips to focus on building a domestic chip industry instead. But China's just one part of the puzzle. Worldwide, there was a supply crunch in memory chips before the Trump-Xi summit -- and that crunch remains post-summit.
Sandisk can still sell every memory chip it can make, with or without China. Investors bidding Sandisk up today just might realize this.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology and Nvidia. The Motley Fool has a disclosure policy.
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