To The Moon

A mild PPI report pushed the S&P 500 to another record close, but the real story overnight was the widening gap within tech. SNDK surged 13.7% after unveiling its long-term growth targets through 2030, lifting WDC and MU with it. Meanwhile, COHR, Cisco and AMAT all delivered solid results—but their stocks were not rewarded. Investors still want AI exposure, but they are no longer paying higher prices for growth that is already widely expected.

S&P 500 Hits Another Record as PPI Eases Rate-Hike Fears

All three major U.S. indices closed higher overnight:

The immediate catalyst was the July U.S. Producer Price Index.

Headline PPI was unchanged from the previous month, easing concerns about another inflation rebound. Goods prices declined 0.7%, including a 3.1% drop in energy prices, offsetting a 0.2% increase in services prices.

However, PPI was still up 4.7% year over year. Excluding food, energy and trade services, prices increased 0.4% month over month.

The report reduced near-term rate-hike concerns, but it did not prove that inflation has been fully contained. U.S. Bureau of Labor Statistics

The market currently sees around a 63% probability that the Fed will leave rates unchanged in September. Technology and real estate led the gains, while Brent crude fell about 2% to $87.07 per barrel. Reuters market recap

The Strongest Trade Overnight: SNDK Surges 13.7%

$SanDisk(SNDK)$ jumped 13.7%, lifting the broader storage sector:

• $Western Digital(WDC)$: +7.3%

• $Micron Technology(MU)$: +4.2%

• SNDK: +13.7%

The rally was not driven by another quarterly earnings release.

The real catalyst came from SNDK’s Investor Day, where management introduced its first long-term financial model covering fiscal years 2028 through 2030:

• Revenue CAGR: mid- to high-teens

• Adjusted gross margin: approximately 80%

• Adjusted operating margin: approximately 75%

• Adjusted free-cash-flow margin: approximately 50%

• After funding business investments, the company plans to return all excess cash to shareholders

These targets are far above what investors have traditionally associated with a cyclical NAND company. SNDK long-term financial targets

Why Long-Term Contracts Matter More Than Growth Targets

The storage industry has always faced one major problem: extreme pricing cycles.

When demand is strong, manufacturers expand production, prices rise and profits surge. Once the new capacity comes online, supply exceeds demand, prices decline and margins contract rapidly.

That volatility is one reason storage companies have historically struggled to earn high long-term valuations.

SNDK is now using a new long-term commercial agreement framework called NBM to reduce that cyclicality.

The company has already signed agreements with eight customers, including three U.S. hyperscalers:

• Around 50% of fiscal 2027 shipment capacity is covered by agreements

• Coverage is expected to reach approximately two-thirds in fiscal 2028

• Agreements include committed purchase volumes and minimum financial protections

• Some contracts contain price floors and caps to reduce extreme pricing volatility

Investors previously had to estimate SNDK’s earnings largely by looking at the next quarter’s NAND prices. The company now wants to lock in several years of shipment volumes and profitability in advance.

That is the main reason Investor Day triggered such a strong rally. The market received more than a higher revenue forecast—it was presented with a business model that could potentially make storage earnings more predictable. Reuters

AI Inference Is Making Data Centers More Storage-Intensive

SNDK also provided an update on High Bandwidth Flash, or HBF.

The company has completed the design of its first HBF storage chip and plans to provide samples next year to customers developing AI inference systems.

HBM solves the need for extremely fast memory located close to the GPU, but it offers relatively limited capacity at a high cost. HBF aims to provide much greater capacity through flash memory while maintaining relatively high bandwidth.

As AI workloads shift from training toward inference, systems must repeatedly access model parameters, user context and KV cache data. Longer conversations and more users both create additional data that must be stored and retrieved.

AI data-center investment could therefore expand beyond simply adding more GPUs to include:

• HBM and DRAM

• High-speed NAND flash

• Enterprise SSDs

• Nearline HDDs

• High-speed networking and optical connectivity

This helps explain why SNDK’s Investor Day also lifted MU and WDC.

However, the three companies have different areas of exposure:

• SNDK: NAND, enterprise SSDs and HBF

• MU: HBM, DRAM and NAND

• WDC: primarily Nearline HDDs and high-capacity data-center storage

SNDK’s long-term contracts and 80% gross-margin target cannot be directly applied to WDC. WDC’s rally mainly reflects higher market expectations for overall AI storage demand.

Why Did SNDK Rise While COHR and Cisco Fell?

Another important signal overnight was that strong earnings no longer guarantee a higher share price.

$Coherent(COHR)$ reported fiscal fourth-quarter revenue of $2.05 billion, up 34% year over year. Adjusted EPS reached $1.74, ahead of market expectations.

The company also guided for next-quarter revenue of $2.2 billion to $2.4 billion and adjusted EPS of $1.85 to $2.05. Demand showed no obvious signs of weakening. COHR earnings release

COHR shares still pulled back.

The market is concerned that as shipments of lower-margin optical transceivers increase, gross-margin improvement may not keep pace with revenue growth.

$Cisco(CSCO)$ offered an even clearer example.

Cisco expects fiscal 2027 revenue of $72.2 billion to $73.4 billion, above market expectations. AI infrastructure orders reached $9.3 billion in fiscal 2026, including around $4 billion of hyperscaler orders in the fourth quarter alone.

The stock still fell 8.4% because next-quarter gross-margin guidance of 65% to 66% was slightly below the 66.1% expected by the market. A higher hardware mix and rising component costs are weighing on profitability. Reuters

Investors are not questioning whether AI orders exist. They are reassessing how much of that demand will ultimately translate into profit.

AMAT’s After-Hours Decline Confirms the Risk of Elevated Expectations

$Applied Materials(AMAT)$ reported its quarterly results after the market closed:

• Revenue: $9.12 billion, up 25% year over year

• Adjusted EPS: $3.50, up 41%

• Adjusted gross margin: 50.4%

• Next-quarter revenue guidance midpoint: approximately $10.25 billion

• Next-quarter adjusted EPS guidance: approximately $4.02

Revenue, earnings and forward guidance were all solid, yet the stock still fell as much as 4% in after-hours trading. Applied Materials earnings release

The reason is similar to what happened with COHR and Cisco.

AMAT has already more than doubled this year. Expectations surrounding AI chips, HBM, advanced packaging and new fab capacity have been heavily priced in.

The company now needs to deliver more than an earnings beat. It must meaningfully exceed even the market’s most optimistic assumptions.

The overnight reactions can therefore be summarized as follows:

• SNDK introduced a new long-term earnings framework, prompting a valuation upgrade

• COHR and Cisco confirmed strong demand, but margins failed to provide a bigger surprise

• AMAT maintained rapid growth, but did not create a large enough positive expectation gap

Tiger Radar’s View

The overnight market action reinforces my view that AI hardware fundamentals have not collapsed. Investors are simply becoming more selective about what they are willing to pay for.

The storage sector received a powerful long-term narrative upgrade.

SNDK’s multi-year agreements, HBF development and exposure to AI inference could reduce some of the volatility associated with the traditional NAND cycle. WDC and MU could also benefit from rising data-center storage demand.

However, SNDK has already risen more than sixfold this year and gained around 26% over the past four trading sessions. It can no longer be treated as a low-priced storage recovery play.

Here are the five signals I will be watching next:

1. Whether SNDK can hold the gap created after Investor Day

2. Whether WDC and MU can continue rising while SNDK consolidates

3. Whether the long-term agreements can support the targeted 80% gross margin

4. Whether HBF samples are delivered on schedule next year

5. Whether tonight’s U.S. retail sales report pushes Treasury yields higher again

U.S. July retail sales will be released at 8:30 p.m. SGT tonight. The market expects monthly growth of around 0.1%, down from 0.2% in June.

A stronger-than-expected report could revive concerns that interest rates will stay higher for longer. If the data is too weak, the trading narrative could shift from cooling inflation to slowing economic growth. Economic calendar

I would therefore avoid chasing SNDK immediately after a one-day 14% rally.

The more important question is whether this Investor Day can genuinely help storage stocks escape the traditional pattern of one pricing rebound followed by another valuation contraction.

Today’s Poll

After SNDK unveiled its long-term targets through 2030, which storage stock do you prefer?

A. SNDK — Long-term agreements and HBF could reshape its earnings model
B. WDC — It has not surged as much and still offers exposure to data-center HDD demand
C. MU — It provides exposure to HBM, DRAM and NAND
D. None for now — I would wait for SNDK to digest its 14% one-day rally

Let us know in the comments: Can SNDK’s long-term agreements truly reduce the storage industry’s cyclicality, or has the 80% gross-margin target already pushed expectations too high?

Disclaimer: This content is for market discussion only and does not constitute investment advice. Storage and AI hardware companies remain exposed to valuation risk, pricing cycles, customer concentration, technological disruption, capital expenditure, contract execution and interest-rate changes. Please refer to official company disclosures and real-time market data.