US semiconductor stocks extended their rally in pre-market trading on Friday, with SanDisk, Micron Technology, and Intel among the notable gainers as investors continued to pile into artificial intelligence-linked technology stocks following a strong recovery in the sector. According to reports from CNBC, E-mini Nasdaq-100 futures were up 0.47% at 29,877.25 as of 6:03 a.m. GMT-5. The broader market also traded higher, with the S&P 500 rising 0.5% and the Nasdaq Composite advancing 0.6%. The Dow Jones Industrial Average added 132 points, or 0.3%, with the Dow and S&P 500 hovering near record highs, indicating that the broader market recovery has extended beyond the technology sector. Pre-market trading on Friday remained relatively subdued, with S&P 500 futures little changed and Nasdaq 100 futures also unchanged, while futures on the Dow Jones Industrial Average fell 0.2%.
Despite SanDisk guiding investors toward 80% gross margins through fiscal 2030, the stock rose 14% as investors treated the target as a floor rather than a ceiling. The company currently earns 84.6% gross margins for the quarter ended July 3, up from 78.4% three months earlier. Looking back further, SanDisk's margins have nearly quadrupled over five quarters, climbing from 22.5% in March 2025 to the current 84.6%. The company reported $8.97 billion revenue last quarter, up 51% in three months and 372% in a year, with full-year revenue hitting $20.2 billion. Management attributes about two-thirds of the growth to higher prices and only one-third to shipping more chips, highlighting the pricing power in the AI memory market.
The latest developments show major tech giants continuing to invest heavily in AI infrastructure, with Microsoft Azure and Amazon Web Services both experiencing exceptional growth rates. As reported by Investing.com, Microsoft Azure continues to grow at more than 40% year over year, while Amazon Web Services maintains growth at more than 35%. These companies are all spending tremendous amounts of money to maintain and expand their positions in AI infrastructure and data center markets, with Microsoft, Alphabet, and Amazon all continuing to build out their own suites of products. The memory market outlook remains optimistic, with Micron executives stating that the memory market could remain structurally tight beyond 2027 as AI-related demand continues to outpace supply growth.
SanDisk has secured eight multi-year deals covering about half of fiscal 2027 shipments, rising to two-thirds in fiscal 2028, providing price floor protection against market volatility. CEO David Goeckeler emphasized the company's positioning, stating "We closed fiscal 2026 with a leading technology portfolio, established datacenter as a key growth pillar, and deepened our customer partnerships." The company's NAND flash memory chips serve AI data centers in enormous volumes, with the recent surge driven by AI infrastructure demand. However, analysts warn of potential risks from Chinese manufacturer YMTC, which could reach 10% of global NAND capacity as soon as next year, potentially impacting pricing power if cheaper Chinese supply enters the market.
Wall Street maintains unanimous bullish sentiment on SanDisk, with no major bank publishing targets below current trading levels. JPMorgan resumed coverage at Overweight with a $2,250 target (about 47% above Thursday's close), while Susquehanna sits at $3,250. Even conservative Jefferies assigns a $1,750 target, still 15% above current price. The stock trades at 20.7 times past earnings but only 7.2 times expected earnings, reflecting optimism about continued profit growth. Despite the recent volatility - shares peaked at $2,335 on June 25 then fell 56% to close at $1,015.89 on July 29 before bouncing 50% - analysts maintain strong buy ratings, though investors remain cautious about the stock's 541% year-to-date gains and 35% discount to June highs.
