SanDisk Set to Benefit from AI Spending Boom

JPMorgan analyst Harlan Sur says the AI boom is beginning to justify massive infrastructure spending by hyperscalers. In recent commentary, Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corp (NASDAQ:MSFT), and Alphabet Inc. (NASDAQ:GOOGL) (NASDAQ:GOOG) highlighted strong demand for AI services and improving returns on investments.

The improving economics of AI infrastructure spending suggests that business fundamentals are supporting continued capital investment in the cloud industry, according to Sur. This development is significant because it could extend the investment cycle and create a more durable tailwind for memory suppliers like SanDisk Corp (NASDAQ:SNDK).

Sur noted that Amazon attributed part of its recent increase in capital spending to higher memory costs, but cloud providers are willing to absorb those costs to secure enough capacity for expanding AI workloads. This dynamic reinforces pricing power for suppliers of high-performance memory and enterprise storage.