Why Is SandiskStock Still Dropping?
Key Points
Sandisk stock has dropped 18% this week as investors fear competition from CXMT.
But CXMT doesn't compete directly with Sandisk.
- 10 stocks we like better than Sandisk ›
Sandisk (NASDAQ:SNDK) stock fell for a fourth straight day Thursday, continuing a rout that began with a CXMT announcement Monday that the Chinese DRAM company has invented "4F square" technology to increase DRAM storage density -- and will soon be coming for Sandisk's market share.
Sandisk stock is down 8.1% as of 9:50 a.m. ET, and down 18% so far this week.
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Who is CXMT and how scared should we be?
Global market intelligence company Trendforce estimates that CXMT holds about 9.5% of the global DRAM memory market, placing it fourth in line behind Samsung (39.4%), SK Hynix (24.9%), and Micron (NASDAQ:MU), which has a 23.3% share.
Sandisk doesn't appear anywhere on this list because -- contrary to what you might think after watching the stock decline 18% this week, Sandisk doesn't actually make DRAM at all! (Sandisk manufactures NAND flash memory instead.)
So while investors may be nervous that CXMT's advances in 4F square technology will win it a bigger share of the DRAM market, that probably shouldn't affect Sandisk stock nearly as much as it's doing.
A reason to buy Sandisk
To the contrary, a note out from KeyBanc analyst John Vinh this morning supports the argument that the farther Sandisk stock falls, the more of a buy Sandisk becomes.
With memory supply still constrained, Vinh predicts DRAM prices will rise 15% to 20% year over year in Q4 2026, while NAND prices will rise 20%. High-bandwidth memory -- the most lucrative segment of this market and the area where CXMT is weakest -- could see prices rise 80% to 100% in Q1 2027.
This implies continued high prices for memory makers such as Sandisk. Despite the sell-off -- indeed, because of the sell-off -- I think that's a great argument for buying Sandisk stock today.
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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. The Motley Fool has a disclosure policy.
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