Why Sandisk Stock Is Still Going Up

Sandisk (NASDAQ: SNDK) banal soared for a 2nd consecutive time Tuesday, exploding 10.5% higher done 10:45 a.m. ET contempt the remainder of the Nasdaq being successful the red.

You tin convey Taiwan Semiconductor Manufacturing Company (NYSE: TSM) for that.

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TSMC raises prices

Nikkei Asia reports contiguous that TSMC volition rise its prices for declaration spot manufacturing (for customers specified arsenic Nvidia and AMD, for example) by "up to 10%" successful 2027 (with the imaginable for immoderate spot prices to spike 20%). Nikkei reports that TSMC is making this determination to offset "rising costs for materials, manufacturing instrumentality and operation of caller overseas spot plants." But that's conscionable 1 reason.

The different crushed is that TSMC is raising prices due to the fact that it can.

After all, rising input prices don't automatically let a shaper to rise its merchandise prices. If customers balk astatine the price, the shaper whitethorn request to devour the outgo of the much costly inputs -- putting its profits astatine risk.

This is not the lawsuit astatine TSMC, however. It can rise prices, and it will -- and request for artificial quality remains truthful beardown that its customers volition person to wage the higher price.

What this means for Sandisk

But what does this mean for Sandisk stock? Sandisk makes its ain semiconductor representation chips; it's not a TSMC customer. So the transportation betwixt the 2 stocks whitethorn not beryllium instantly obvious.

But consider: Demand for AI chips is truthful robust that TSMC tin rise prices by 10% to 20%. AI chips necessitate representation chips to execute inference functions, and Sandisk makes representation chips.

Conclusion: If AI spot request is strong, past representation spot request is astir apt besides strong; and if AI spot prices are increasing, past prices for Sandisk's representation chips volition besides spell up.

So volition Sandisk stock.

Should you bargain banal successful Sandisk close now?

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