Volatility Takes Centre Stage

Technology stock markets, especially memory stocks, and most especially SanDisk , have sold off dramatically in recent days. Do I know what is going on? Not really, but I think the big phenomenon here is a bout of profit-taking which is close to being a full-scale panic.

Back in the early years of the 20th century, what we now call bear markets or corrections were known as panics, which is a good description of what is happening.

In retrospect, SanDisk was a panic attack waiting to happen. In less than a year, the shares had risen nearly 60-fold. No wonder investors are panicking as they see their profits melting away. But the company has brought its reporting date forward from 13 August to 5 August, which is usually a good sign.

I expect the results to be sensational and a source of reassurance to investors across the sector. I also suspect that SanDisk shares are incredibly cheap. The valuation is dropping towards $200bn for a highly profitable, cash-generative business, which could see sales running at $50bn plus.

The story goes that NAND prices are falling because the big consumer electronics companies are raising prices for their products, and this is affecting demand along the supply chain. But the big ‘something new’ in the memory market is not consumer electronics, but AI infrastructure and that demand is strong, maybe still accelerating and is rapidly becoming the elephant in the room.

I don’t know what will happen to the SanDisk share price in the short term, but I suspect somewhere in their future lies a huge rally.

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