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Hey guys, welcome back. Hope you're doing well. Still here in Vegas, starting to feel a little better, but my voice is still a mess. But I had to get my insights out today for what we saw in the trading action because, you know, over the last 48 hours, we have seen the volatility. It has been absolutely relentless in the memory sector overall.
What we've seen happen with the memory titans, the Fab 4, it's been bit of a seessaw action over the last 48 hours. We saw a vicious macrodriven sell-off. It briefly shook weak hands out of the semiconductor space. But as we discussed in our last video, panicking over macro noise while ignoring the massive underlying hardware demand or the signals that we see in the marketplace is often how retail investors frankly just get left behind.
Today, the chip sector, it staged a powerful datadriven rebound led by exact structural layer that we've been tracking on this channel, memory and storage. While the mainstream media media is busy reacting to daily price swings, smart money is actually looking at the orders that are hitting the tape.
I want to pull up a article that came from the diversified financial services, B Riley, that lays out what he expects to see with the capex spending. So, let me pull that up. You can see the title on your screen. It's all about the chip market, the US earning season's kickoff. Of course, they're talking about the two massive earnings that we'll see this weekend, ASML and TSMC.
Let's scroll down and see what the report has to say. You can see that's what they mentioned here. We're going to see ASML and TSMC's second quarter reports this week. They will serve as bellweathers for the broader semiconductor and semiconductor equipment industries. Further on, you see Bill B. Riley which is a diversified financial services firm.
BR Riley's core thesis is that the acceleration in global hyperscaler AI related capex has exceeded its own prior its own prior expectations and the earnings report from ASML and TSMC will provide critical insights into the spending trends of global tech giants on AI infrastructure. Take a look down here on what they're calling out.
Currently combined AI related capex guidance from US from major US hyperscalers for fiscal 2026 have surged to approximately 7 excuse me 695 to 725 billion a level that be Riley had originally projected for fiscal year 2027. So therefore they have revised their estimate for a total global a AI related capex spend this year to reach approximately 880 billion with next year potentially surpassing the $1 trillion mark.
This is a massive signal for the memory sector for the storage sector as all. When we're seeing this level of investment from the hyperscalers it is just going to drive the demand that we need for memory in the marketplace. This is a strong signal and I do think the earnings report that we see from ASML and TSMC will drive a bullish flag for the memory sector.
I think it'll drive us into the weekend into the green with a couple of strong days left in the week. But let's take a look at ASML right now. You can see the ADR here in the US had a strong day today. up about 3% $50 for each ADR. Closed at $1775, but if you look in the after hours, we're up another $41 for that ADR.
So, it's anticipating we're starting to see an anticipation of a strong print. And if we scroll down and just take a look at some of the price targets that have come in, let's see if any of that has changed. Right now, we saw RBC Capital on the 13th. They revised from 17 to 2000. So, a little bit of a upside.
We see Bernstein earlier in the month went up to about 2,600 for this ADR. So about a 47% upside from where we sit today, but it's all being driven right now in anticipation of what their earnings will be. They drop into the street tomorrow. I think it's going to be a bullish flag as I mentioned for the memory sector.
And let's see how the memory titans did today. If you take a look at Micron, it kind of feels like a seesaw if I'm being honest because we were down by about 5% yesterday. We're up by about 5% today. But the after hours right now is signaling a little bit of a shift. We're up $16, right about that $1,000 mark.
I have a feeling we'll pass the $1,000. We'll get through that psychological level again tomorrow for Micron. And let's hope we continue to build upon that momentum. Let's keep pushing towards the price targets that we see in the market right now. Because if I scroll down here for Micron, you'll see the analyst sentiment is still strong buy and the price target is just under $1,500 a share.
Guys, that's a $51 upside from where the stock is today, where it's trading based on what the analysts say. And if I scroll down here, you can see where the news the new targets came in. So Key Bank, they dropped a new target into the market today. They went from 1,600 to,750. That's the article that I was going to pull up.
You can see key bank maintains Micron as an overweight with a price target of 17. So this is a strong target with everything that's happening with the memory sector with Micron right now. To see Key Bank come out and drop this price target is a really strong sign and it's based on three factors overall.
So their analyst John Vin he did a visit a a a extensive kind of supply chain trip across Asia and his checks in his opinion it confirmed everything that we need to know about the memory shortages and he mentioned that they are not a short-term blurp. They are structurally locked in these shortages throughout 2027.
Ben was so confident in the underlying metrics that he raised that price target to what we just showed you to 1750. And it's all based on a couple of factors. The reason he bro he drove that price target up is based on the DRAM pricing. He mentioned that he's projecting it's projected to climb another 15 to 20% in Q3 of this year followed by an additional 15% in Q4.
Nan pricing when he looked at that he's anticipating it to skyrocket 30 to 40% in Q3 this year followed by another 15% step up in Q4. And finally, with HBM premium pricing, it's on pace to more than double by next year. So these metrics are accelerating so quickly right now. And they're accelerating because of HPM, the high bandwidth memory, whether it's HBM 3 or HBM4.
We know they require significantly more wafer consumption compared to DDR5 memory. And this is why I think this is a bit of a sleepy uh bullish sign that we haven't talked about much. We talked about it a little bit on a few videos ago, but the fact that Micron has locked up a 10-year supply with global wafers to ensure that they can get the wafers that they need.
Many are mentioning that this very well could be the next bottleneck that we see in the market. That wafer supply could be a bottleneck that we see in the market and a severe shortage of it overall. So, I love the fact that Micron, they plan to invest three billion to strengthen the US semiconductor supply chain and they have a $500 million strategic financing package with global wafers.
It's a 10-year supply agreement. So, if in fact this is the next bottleneck, access to wafer supply, the fact that Micron just locked up a 10-year agreement with glo with global wafers is a huge under underestimated I think underappreciated sign in the marketplace. Such a strong move for Micron overall.
But this is what we're seeing right now. We're seeing that HBM as you know it drives more. every single gigabit of HBM produced manufacturers. We know they have to sacrifice nearly 3 gigabits of standard D uh DRAM capacity. This creates a severe structural deficit for the PCs and the smartphone uh market overall.
The memory that's needed for those devices, that market is strangled right now for what we're seeing. And that's why we're seeing price move for those consumer goods overall. But this deal, it allows Micron to flex the massive pricing power that they'll have across the entire portfolio. As I mentioned, is such a a in my opinion, such an underappreciated uh deal in the marketplace.
But I want to jump over to SanDisk as well. That's the other one I wanted to talk about in today's video. You can see that SanDisk jumped by $83 today. We know they were down by over $200 yesterday. I think it was almost 13%. picked up 5% back today, up almost 2% in the after hours, closing in on just about $1,800 a share again.
And if we look down at their technical analysis, it is a buy. Remember, Micron was a strong buy. SanDisk is a buy, but their price target right now is at about 2100. So, you're seeing about a 20% upside in that price target from where the stock trades today. But there was a few really bullish signs and signals in the market today overall.
right here. Web Bush. I love this article when I saw it related to Sandis. It says Webb Bush pounds the table. Buy Sandis before the August 5th earnings. If you scroll down here, you see Webb Bush, they hiked its revenue and earnings target by quadrupledigit basis points, push both above consensus, and warned that these aggressive moves may underestimate the company's strength.
As it stands, Web Bush sees revenue approaching 9 billion for the fiscal fourth quarter, earnings per share exceeding 3750 and the strengths persisting into subsequent years. As they further go on, it says it's the consensus forecast suggests revenue of 8.33 billion in adjusted earnings of 34 representing more than 11 11,000% growth over the prior year for SanDisk.
But they believe the price can double from here. Web Bush Webb Bush has an aggressive a 62% price target increase. It's 200 It's 2000 forecast falls short of the high-end range. Revisions in early July put this in the market of 3,00 to 3,200 per share. That's what Webb Bush is saying right now. It's sufficient for nearly 100% upside from mid July support targets right now.
If we scroll down here, I'll show you where it stands on their page as well. You can see it wasn't just, we don't see it right, but Evercore ISI also has a $3,100 price target issued July 12th. It's a brand new target for the company. As you can see here, they didn't have a prior target, but just look at the price targets we see for Sandis now.
All in the range of 2,200 up through 3,100. We know that Web Bush just pound the table based on what they're seeing uh from from Sandis to get to a 3200 price. These are massive conviction plays for these analyst community for these analysts overall for the company. And if you look at some of the underlying kind of mechanics, we know that DRAM handles the fast localized processing workloads.
But SanDisk's high density NAN and enterprise SSDs are heavyduty reservoirs holding the vast data sets used to train LLMs. The institutional data for SanDisk tells the entire story. If we look at their float right now, institutions carry they control institutions control almost 80% of SanDisk's act active float.
Institutional buyers are outnumbering sellers at a sharp 2:1 ratio. What do you think that tells you when you see institutional buyers out outpacing the sellers at a 2:1 ratio? It is showing you that the whales are there. They're stepping in. They're supporting the stock. And we're seeing that engineer samples for their high bandwidth flash is going to ship later this year alongside long-term enterprise supply agreements that are running out three to five years.
That's another bullish sign for for Sandis. The fact that they have these supply agreements that are running out three to five years. I don't think it mentions it here, but I think as I scroll down here into the Evercore target, you'll see it right here in this article that the company has signed three deals in its fiscal third quarter totaling $42 billion of remaining performance obligations and two additional deals early in the fiscal fourth quarter with undisclosed balances.
This also is an un underappreciated move by SanDisk in the marketplace right now. Evercore estimates that all five deals represent approximately 62 billion of minimal committed revenue over the next several years with more than 11 billion of financial guarantees and prepayments. The firm projects that over one-third of SanDisk's fiscal 2027 bits will be tied to these agreements at a gross margin above 80%.
So this is a big move as well for SanDisk. I think this also gives me conviction for this stock long term. When you see what they're going to deliver, when you see these agreements with with 42 billion of the three, counting for I think they said 62 billion when all five get announced, the revenue visibility that you see for this company is huge.
It is trading at $1,800 right now when most price targets are in the $3,000 range. So guys, you have to assess that against your own individual risk tolerance, but in my opinion right now, it is a strong opportunity to have an entry point into SanDisk if you were looking for one. But I also want to jump and just finish the video with just kind of taking a look at Sandis, excuse me, SKH Heinix because we saw SKHinix in its kind of I think it's second day of trading now on its uh for its ADR.
It closed today at 19392 up almost $42 on ADR about a just over a 27% increase. seeing a little bit of pullback in the after hours right now. But guys, the the price targets that I'm seeing right now for this ADR in about 300 range, 335. There's only one right here. You can see the average price target is 355.
So about an 80% upside from where the stock is trading today. Analyst consensus, as you can see, is only one analyst that's covering the ADR right now, but he's listing it as a strong buy for the company. reality that we're seeing in the marketplace right now is that this ADR it represents a staggering 44 to 50% premium over its core domestic over the South Korean shares for SKH heinix.
So this is a massive premium and why are we seeing that massive premium? Part of the reason is because IBM's recent Q Q2 update confirmed the massive late quarter scramble for enterprise buyers into the storage and memory infrastructure to frontr run the price hikes that we're going to see. And because SKH is trading at a forward PE of under 6x right now, US institutions are aggressively using the ADR as a liquid cheaper proxy to gain exposure to this company right alongside Micron.
So that's why we're seeing that move. Mega, as I mentioned, it is listed at right now a staggering 44 to 50% premium over its core domestic South Korean shares. So right now, we're seeing some big moves with SKH High. Let's see if it can continue tomorrow. We're seeing a little bit of pullback, probably a little we'll see maybe a little bit of profit taking.
Maybe we'll see what it does when the opening bell rings tomorrow. We did see some capital rotate back into the other players like we saw with Micron SanDisk. Western Digital was up today. Also, Seagate was up as well. But I want to finish today looking at the article that came out from HB from HSBC.
You can see here HSBC defends memory trade says it's too early to be concerned. If we scroll down, you can see HB HSBC is standing by its bullish view on memory Asian chip makers, arguing that investor concerns over a potential peak in the semiconductor cycle are premature. But the analyst pointed out that the fresh catalysts are emerging, including anticipated price increases for HBM following a rally in commodity DRAM as well as further average sale average selling price gains for HBM4 adoption begins.
They also highlighted growth in the soam 2, a mobile DRAM base module tied to the expansion of ARMs based C uh CPUs and the additional upside in NAND demand from context memory storage used for AI agents. The long-term agreement spanning three to five years should improve earnings the earning visibility over the next two to three years and reduce the earnings volatility which could support higher valuations, the analyst said.
Finally, HB HSBC compared the current memory cycle to the 1990 1999 PC super cycle, arguing that a Gentic AI should improve off office office productivity and reshape workflows. The analysts believe cloud service providers are unlikely to slow capacity expansion as they compete for a fast growing market and expect the the coming HBM4 transition to accelerate.
HBM price increases relative to commodity DRAM. So this is all the reasons why you see HSBC defend the memory trade and basically say it is too early to be concerned and these are the clear takeaways that we are seeing in the market today. It's an overarching kind of technical takeaway for today and it is very clear in my opinion when you take a look at everything we saw this week when you take a when you when we are right now in the position ahead of major ecosystem earning updates with ASML and TSMC that we'll see later this week.
The actual structural demand for high performance memory and enterprise nan is outstripping Wall Street's leg legacy models. Between the massive capex adjustments, the structural dis supply deficits caused by HBM wafer consumption and the intense institutional accumulation. Recent market selloffs look like premier entry points for companies that are in the memory value chain.
But let me know your thoughts in the comments below. Are you viewing it the same way? Are you holding Micron? Are you feeling anxious about the memory sector right now? Or are you scaling into these players for the next massive growth, the next leg up that we're going to see in the memory trade? But guys, in the end, don't forget to hit the like button, smash the subscribe if you're not part of the community.
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