Why Sandisk Stock Shot Higher Today
Key Points
Many of the biggest names in the industry will adopt Nvidia's NVHBM technology.
This will standardize the industry's high-bandwidth memory (HBM) connection.
Memory chipmakers will benefit from lower power consumption, higher bandwidth, and additional compute.
Shares of Sandisk (NASDAQ:SNDK) charged sharply higher on Monday, jumping as much as 8.3%. As of 11:24 a.m. ET, the stock was still up 7.9%.
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While a rebound in technology issues certainly helped, the semiconductor specialist rallied on positive news in the high-bandwidth memory (HBM) space.
Image source: The Motley Fool.
Industry standard
Earlier this year, Nvidia (NASDAQ:NVDA) announced the development of NVHBM, the company's custom HBM architecture. NVHBM is a custom HBM die that delivers 15% lower power consumption and 30% higher bandwidth, all on a smaller die than HBM4e. To be clear, this isn't a replacement for traditional HBM, but rather connective technology between Nvidia's NVLink and HBM chips.
A report emerged over the weekend that Nvidia has asked Samsung Electronics to adopt Taiwan Semiconductor Manufacturing's 3-nanometer chipmaking process to produce the NVHBM dies, according to a story that first appeared in the Seoul Economic Daily. This will mark the first such collaboration between TSMC and Samsung, according to the report.
Moreover, Nvidia has approached the industry's biggest memory producers, including Micron Technology and SK Hynix, to use this process, which would standardize it across multiple memory suppliers. This, in turn, would free up valuable real estate on the compute die, resulting in up to 30% additional compute.
Investors have been concerned that demand for artificial intelligence (AI) could falter, thereby reducing demand for the AI chips. This move by Nvidia suggests that -- despite fears to the contrary -- the adoption of AI still has room to run. This suggests that the same is true for memory chip suppliers.
Even in the face of unprecedented demand for memory chips, Sandisk stock is selling for just 19 times earnings and 6 times forward earnings. This gives investors the opportunity to pick up shares at a discount.
Danny Vena, CPA has positions in Micron Technology, Nvidia, and Sandisk. The Motley Fool has positions in and recommends Micron Technology, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.