$Sandisk(SNDK.US)$Micron Tech(MU.US)Hello everyone!
The basic principle of stock valuation is the discounting of future cash flows. Cyclical stocks are given low valuations because they can only earn money for a few years, while growth stocks are given high valuations because they will earn more and more in the future. However, one must pay attention to how much money can be earned in the next 5, 10, or 15 years. Valuation requires specific numerical calculations, not imagination; this necessitates valuation models and anchor references. Everyone should compare the valuation principles and then analyze the future expectations and valuations of AI infrastructure industry chain stocks, as well as SanDisk and Micron Technology.
The core of the issue is whether SanDisk and Micron Technology are cyclical stocks, which is the focal point. My view is that they used to be, but they are not now. This has been my persistent viewpoint for over half a year. In my article on New Year's Day this year, I explicitly stated: SanDisk is still expected to be the top gainer in the S&P 500 for two consecutive years, setting a historical record, precisely based on this judgment. Even with the short-term drop like this, SanDisk has already seen a 490% gain so far this year, and its current dynamic P/E ratio for the calendar year 2026 is approximately 6-7x.
The memory wall has become very clear, and the larger supply-demand gap from 2027 to 2030 is also evident. Do not just look at the spending of a few major tech giants when analyzing AI development, even though it is still accelerating; this is not the anchor. This issue has been manipulated by narratives. The development speed of edge and physical AI exceeds people's imagination, and it is already clear that AI needs more quantity and better performance in memory and storage. There is no need to think about storage price drops in the coming years; locking in large orders to control the increase in prices is an expected and inevitable path.
///The current adjustment is essentially an adjustment within the upward trend. The killing of valuations and deleveraging are games played in capital markets. The adjustment magnitude of US stocks SanDisk, Micron Technology, and the semiconductor sector is all within a reasonable range and has nothing to do with fundamentals.
///I have mentioned the risks of the Korean stock market multiple times before, specifically geopolitical issues. Hynix and Micron Technology cannot be simply compared by P/E ratio; they are not the same thing. The platform once invited me to serve as the StockPro for Hynix, but I did not do it because of this uncertainty. I don't know how to explain it.
///Regarding SanDisk, it is a stock I have firmly held. SanDisk's FLASH technology and processes are first in this field. The development of AI requires more and better storage products. SanDisk's technical reserves, HBF and B2 patents, are the inevitable path for AI storage development. Currently, there are no signs that future developments can bypass SanDisk's technical patents. HBM is already widely applied, and the next 风口 (trend) in storage will be HBF and B2 patents.
///With the demand for inference from large AI models, the price increase of FLASH products has been greater than that of DRAM products since the second quarter of this year, and the same applies to the third quarter. The future trend is clear. SanDisk's current valuation is entirely based on earnings, with no expectation component for HBF. Some articles written by AI use past data, and their viewpoints are wrong!
Looking to the future, let's see what happens!
Shui Diao Ge Tou
When will the moon be clear and bright? With a cup of wine in my hand, I ask the sky. I do not know what time of year it will be tonight on high in the celestial palaces. Riding the wind, I would fly back to where I belong, yet I fear the crystal mansions would be too cold for me. Dancing with my shadow cast by the moonlight, it seems less than perfect here on earth. The red pavilion turns, its light shines through the silk window, keeping the sleepless awake. It should have no resentment toward anyone, why is it round only when people are apart? People may have sorrow or joy, be near or far; the moon may be dim or bright, be full or thin. This has been going on since ancient times. We can only wish that we might live long and share the beauty of the moon together, even if we are miles apart.
🙏🙏🙏
///This kind of decline is common in Myanmar A-shares, but it's the first time I've encountered it in the US stock market. It really makes you doubt life, but faith remains, so we must persist to the end!
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