SanDisk (SNDK.US) single-quarter EPS could exceed $10-12! Cantor estimates that the peak profitability of the storage industry will be extended until 2027.

According to Cantor Fitzgerald senior analyst CJ Muse, artificial intelligence will face severe storage shortages throughout 2026 and 2027. This shortage is expected to create "huge profit potential" for storage chip manufacturers, and stocks like SanDisk (SNDK.US) and Micron Technology, Inc. (MU.US) are in a favorable position for significant growth. Muse stated that this storage cycle is fundamentally different from previous cycles. "From the perspective of NAND, we are basically in a downward cycle lasting seven years," explained Muse. "Therefore, there is no sense of urgency for any NAND manufacturer to increase capacity. And when you add incremental growth from artificial intelligence, I believe we will be in a state of shortage throughout 2026 and 2027." The analyst pointed out that there may be significant profit surprises in the future. He noted that SanDisk's earnings per share for the March quarter could reach $10 to $12, far exceeding the market's expectation of around $4. "When you think about seismic performance surprises in the semiconductor sector, I think back to Micron last December and NVIDIA Corporation three years ago, both of which experienced similar significant performance breakthroughs," Muse said. According to Muse, the storage shortage will also directly affect ordinary consumers. He expects PC shipments to decline by 10% this year, and smartphone shipments to decline by at least 5%. He warned, "In the high-end market, prices will be higher; and in the low-end market, you will see 'downgrades' in storage configuration." Supply constraints are very severe, with Muse mentioning that recently at a meeting, Micron discussed their inability to meet the needs of some major customers by 30% to 50%. Building a new greenfield fab takes more than two years, meaning efforts by Samsung and SK Hynix to increase capacity may not alleviate the shortage until early 2027 at the earliest. Considering the additional demand brought by high-bandwidth memory (HBM) and AI-driven intelligent servers, Muse believes that the shortage issue may not be fully resolved until 2028. "This is definitely a cycle unlike any other I have seen," he concluded. "I do believe that the peak P/E ratio this time will be higher, and I think the profit peak will not occur in 2026, but in 2027, which means there is still room for growth."