US stock SNDK up 35% in a week: What is the market trading on?

Today is Friday. There’s not much to say about the US stock indices themselves. What really deserves attention is the storage sector.

After SNDK’s Investor Day, the stock first went up by almost 14%, and today it rose another 7%+. That’s about a 35% rebound for the week. MU, WDC, and STX were also lifted by this rally.

This signal is straightforward: capital is starting to flow into the entire storage sector.

My long-term SNDK position, even after pulling back from a high of $2,300 to $1,100, I still haven’t sold a single share.

Why?

Because the information revealed at SNDK’s Investor Day isn’t just “performance is good,” but also that it’s challenging the way the market has been pricing storage stocks recently.

The first layer is profitability.

The company’s long-term model for FY2028 to FY2030 is for mid-to-high double digit revenue growth, adjusted gross margin around 80%, operating margin around 75%, and free cash flow margin around 50%.

These numbers are already extremely impressive for the storage industry.

The core reason the market hasn’t wanted to assign SNDK a high valuation in the past has always been simple: people assumed this cycle would peak around 2027-2028, NAND prices would come down, and EPS would fall accordingly.

So no matter how much you earn right now, the market still takes a discount in advance.

But now the company has directly extended the high-profit model to 2030.

They’re essentially telling the market: this period of high profitability might not be as short-lived as you think.

The second layer is the contract structure has changed.

The company has now signed 8 long-term NBM agreements, including 3 with US Hyperscalers, with a weighted average contract term of over four years.

These contracts already cover about two-thirds of the bit shipments for FY28, with a total contract value of about $94 billion, and customers have also provided around $16.5 billion in financial guarantees.

This change is key.

The biggest problem with NAND in the past was that whenever spot prices fell, profits immediately dropped too.

Now, some of the future shipments are already locked in with long-term contracts, and even executed at contract floor prices, gross margins can still be maintained at a very high level.

In other words, SNDK is slowly turning a purely cyclical business into one with contract-protected cash flow.

The third layer, buybacks.

The company has made it clear that, after fulfilling business investment needs, 100% of excess cash will be returned to shareholders in the future.

Currently, the board has authorized $20 billion, with about $15.5 billion remaining, and $4.5 billion was repurchased last quarter.

What’s truly impressive comes next.

Based on the company’s long-term framework, the cumulative free cash flow from FY27 to FY30 is about $124 billion, which is equivalent to 53% to 61% of the current company market value.

What does this mean?

It means that in the coming years, the cash the company generates could theoretically buy back more than half of its outstanding shares.

So this time, don’t just focus on the income statement.

If the free cash flow is really this strong and most of it continues to go towards buybacks, then future EPS appreciation won’t just be due to higher profits, but also for a critical reason: the denominator keeps shrinking.

The fewer shares outstanding, the higher the per-share value becomes.

So if you look at these three things together, the logic becomes clear.

• AI is pushing up NAND demand.

• Long-term contracts are smoothing out the cyclical fluctuations.

• The massive free cash flow is being used for buybacks, continuously reducing the share count.

That’s why, after SNDK rallied one day, funds dared to keep chasing the next day. Of course, it’s nowhere near the point where you can blindly calculate a price target now.

How many years an 80% gross margin can last, whether the industry will expand capacity again, and at what prices the company will conduct share buybacks in the future—these variables will all greatly impact the eventual EPS.

Especially with buybacks. If the stock price is low, the company can buy back more shares with the same amount of money; if the stock price rises too fast ahead of time, buyback efficiency will naturally decrease.

So it’s not very meaningful to apply an extreme EPS and then multiply it by a high PE now.

But one thing has already changed.

Previously, the market would ask:

“How much longer can this round of NAND price increases for SNDK last?”

Now the market is asking:

“What if this time, we simply don’t return to a cyclical bottom so soon?”

If that hypothesis holds, then it’s not just SNDK that needs to be repriced.

It’s the entire storage sector.

NBIS continues to soar!

Our 2026 must-own top pick NBIS also continues to rise steadily today, nearly 9% up. Reviewing the recent two trades, we entered around $165 and $187, currently enjoying a big gain of 68%!

As of this Friday, my account’s 2-year return rate is 428%, and the 1-year return rate is 220%!

US Stock Investment Network is a fintech company specializing in US stock research, founded in Silicon Valley in 2008 by former NYSE analyst Ken, together with several Morgan Stanley analysts and Google/Meta engineers, who utilize AI and big data along with over a decade of US stock practical experience and industry quant models to build a stock market database. It processes tens of millions of stock data points daily: tracking unusual options, real-time main capital flows, institutional position changes, and breaking news from Trump.