$3 billion short positions brutally "washed out"! Under the AI frenzy, storage chip maker Sandisk (SNDK.US) enters extreme territory of short-selling storm.

According to data from S3 Partners LLC, as the share price of storage chip manufacturer Sandisk (SNDK.US) has risen significantly, the short position of the stock has continued to increase over the past few months, and the short squeeze risk has reached an "extreme" level. Short squeeze refers to a rapid increase in stock price, forcing short sellers to cover their borrowed stocks to close their positions (usually resulting in losses), thus further driving up the stock price. The S3 Partners research team wrote in a report, "In the past few months, short sellers have been highly consistent in their actions, taking a reversal strategy as the stock price rises, actively shorting on rallies." The report stated that since early November last year, the short position ratio - a measure of the proportion of borrowed and sold float shares by short sellers - has increased from around 4% to 7.5% of the float shares, and the company's short squeeze risk score has also risen to 82.5. The market value of the short position has incurred losses of about $3 billion, pushing the score into the "extreme" range as defined by the company. Following a 577% surge last year, Sandisk's share price has risen by a total of 112% so far this year, surpassing the S&P 500 index by about 1% and ranking among the top-performing stocks in the index for 2026. Since its relisting, Sandisk's stock price has risen by about 1300%. S3 Partners stated that this rally occurred as the artificial intelligence (AI) trading theme shifted to storage chip stocks, while global storage chip shortages allowed the company to raise prices. Storage chip stocks enjoy "AI infrastructure super dividends" In the just-passed 2025, storage chip stocks and high-end storage product stocks were undoubtedly one of the hottest investment themes in the global stock market, and the same holds true at the beginning of 2026. In addition to Sandisk, Micron Technology, Inc. (MU.US), Western Digital Corporation (WDC.US), and Seagate Technology Holdings PLC (STX.US) have also seen significant increases in their share prices this year. Even after experiencing the meteoric rise of the bullish 2025 super bull market trajectory and the continuation of the bullish momentum into the start of 2026, global investors have not been overly nervous about the sudden rise in valuations of these storage chip stocks, as they believe that the unprecedented AI data center construction frenzy is changing the "cyclical nature" of the storage chip industry. Although they may appear increasingly expensive from a historical price and valuation comparison perspective, the almost "indefinite belief" in the AI investment theme is making these historical comparisons irrelevant. The core logic is that on the one hand, AI servers require much more storage capacity and bandwidth than ordinary servers. On the other hand, industry capacity is tilting towards high-end storage products (such as HBM), squeezing the capacity of traditional storage products and triggering a price hike across the entire storage industry. Storage chip manufacturers are ramping up their capital investments. For example, Micron Technology, Inc. recently announced important progress, with the groundbreaking of its $100 billion top-notch memory manufacturing complex in New York. The company has also acquired the P5 wafer fab from INNOLUX for a total price of $1.8 billion in cash, expected to make a significant contribution to DRAM capacity. SK Hynix also approved a 190 trillion won investment plan last week to build a factory dedicated to advanced packaging testing for HBM in South Korea, expected to be completed by the end of 2027. However, most of this additional capacity is not expected to come online until gradually in 2027, with a substantial impact on supply not expected until 2028 at the earliest. On Wall Street, Morgan Stanley, Nomura, and Bank of America Corp are all calling for the full arrival of the "storage chip super cycle" driven by the AI wave, and the strength and duration of this cycle may far exceed that of the "cloud computing-driven storage super bull market" in 2018. A recent storage chip industry tracking research report released by Nomura shows that under the strong resonance and push brought about by the accelerated progress of global AI data center construction, the demand for enterprise-level high-performance servers, DRAM+HBM storage systems, and high-performance SSDs in data centers has all dramatically increased, leading to a steep upward trajectory in DRAM/NAND storage chip prices. Analysts at the bank judged that this "storage chip super cycle," which began in the second half of 2025, will continue at least until 2027, with meaningful additional supply not expected until early 2028 at the soonest. The bank stated that investors should continue to be heavily allocated to storage industry leaders in 2026, making the "price-profit-valuation" triad of storage chips the mainline investment theme for 2026, rather than just focusing on storage as a single HBM-themed stock. Analysts at Citigroup are even more bullish. The bank's analysts believe that driven by the spread of AI intelligence and the surge in demand for AI CPU memory, storage chip prices will experience a runaway increase in 2026. Citigroup analysts have raised their expected increase in the average selling price (ASP) of DRAM in 2026 from 53% to 88%, and the expected increase in NAND from 44% to 74%.