Wednesday was an eventful day in the life of flash memory maker Sandisk (SNDK 3.50%). A rival announced a technology that apparently reduces the need for computer memory, while the company divulged a pricey investment in a peer. These combined to drive the stock’s price down by almost 4% by the end of that trading session.
Thanks for the memory
On Tuesday, Alphabet‘s Google announced that technology, TurboQuant, in its official research blog. This is a compression method that greatly reduces the memory cache used to store data from user interactions with artificial intelligence (AI) models.
Image source: Getty Images.
This, of course, is a rather direct threat to businesses that specialize in memory hardware, and that has long been Sandisk’s stock in trade.
Separately, the following day, Sandisk revealed in a regulatory filing that one of its subsidiaries purchased 139 million shares of Nanya Technology Corporation, a memory chip developer and manufacturer based in Taiwan. This purchase, which totals $1 billion, gives it just under 4% of the company’s outstanding common shares, which are traded on that country’s stock exchange.
In addition to the transaction, SanDisk and Nanya entered into a strategic supply agreement under which SanDisk will receive Nanya’s dynamic random access memory (DRAM) products. Sandisk said this agreement “is intended to support the company’s long-term DRAM sourcing strategy.”
Today’s Change
(-3.50%) $-24.62
Current Price
$677.86
Key Data Points
Market Cap
$104B
Day’s Range
$638.00 – $687.22
52wk Range
$27.89 – $777.60
Volume
21M
Avg Vol
19M
Gross Margin
34.81%
Time to Google “challenges for Sandisk”
Of the two developments, the one I’d worry about if I were a Sandisk investor is the Google announcement. While TurboQuant seems to be some time away from adoption, the technology (and its potential offshoots) could pose a real threat to memory hardware makers. It’s early days, however, so it’s best to wait and see how TurboQuant performs in real-world scenarios before hitting the sell button.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
