SanDisk Investment Thesis!
Transition from cyclical commodity to high-value AI infrastructure!
When the AI boom began in late 2022, investors began speculating about which companies would come out as the big winners of the AI revolution.
It quickly became apparent that GPUs are indispensable, so the demand for them exploded, making Nvidia the largest company in the world by market cap!
Now investors are on the lookout for the “next Nvidia”. However, it is increasingly looking likely that instead of a single gigantic winner, such as Nvidia, the AI boom is elevating whole sectors, whilst destroying others.
2026 has begun with a rapid and severe correction in Software-as-a-Service companies, as investors fear AI disruption. While at the same time, the stock prices of AI infrastructure equipment sellers have risen, driven by an unprecedented rise in capex spending.
All AI infrastructure players plan to spend big in 2026:
Amazon $200B
Google $180B
Microsoft $105-140B
Meta $115-135B
There is a famous saying that always gets repeated in detective movies:
“FOLLOW THE MONEY”.
Understandably, as all great investors are basically shrewd detectives, they are following the money. These capex guidelines clearly imply that 2026 will be an incredible year for companies manufacturing the equipment that’s driving the AI revolution.
And here I would like to introduce you to SanDisk, the business I am covering today.
They specialise in manufacturing memory chips, which are crucial for storing the vast amounts of data that AI training and deployment require.
The global memory industry is entering a transformative era, characterized by a structural pivot from cyclical commodity to high-value AI infrastructure.
Let’s take a look at the business.
1. Business Model
2. The Opportunity
3. Valuation
4. Valuation Model
5. Conclusion
1. Business Model
The semiconductor industry is vast and very complicated, so when people talk of computer chips, they could mean dozens of different things. Sandisk operates in a specific niche of the industry, manufacturing memory chips. But even that is a broad description, as within the term memory, there are sub-niches that might sound the same, but are very different.
About a year ago, in February of 2025, Sandisk was split from its parent company, Western Digital, to fully focus on the NAND flash memory market.
The memory market is mainly split into two technology families:
DRAM
NAND Flash
DRAM is very fast and holds the data that CPUs and GPUs are actively using to process computer computations. The data is not permanent and disappears if the power is lost.
Meanwhile, NAND Flash is slow and is used to store memory for the long term to be used by DRAM and GPUs later. The data is permanent, so in case of a power outage, it is safe.
Both types are very useful for different use cases.
While key players in the memory industry, such as Samsung, SK Hynix, and Micron, produce products using both technologies, Sandisk exclusively focuses on the NAND market.
Sandisk does not sell raw memory as that would be a commodity business with low margins. Their value comes from turning NAND flash into complete, performance-optimized storage solutions that bundle hardware, firmware, controllers, and reliability features.
The company is organised into the 3 key segments:
Edge
Consumer
Data Centers
Let’s expand on them.