Key Points
President Trump says Intel will manufacture semiconductors in partnership with Apple.
Sandisk may benefit from increased AI chip production by selling even more memory.
Sandisk (NASDAQ: SNDK) raced out of the gate this morning, surging 10.7% through 11:15 a.m. ET Thursday after President Trump announced he has arranged a partnership between Apple(NASDAQ: AAPL) and Intel(NASDAQ: INTC), whereby Intel will manufacture semiconductors for Apple.
Apple stock gained nearly 1% on the news, while the semiconductor companies performed much, much better. In addition to Sandisk's gain, Intel stock is up 9.5%.
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What Apple and Intel are up to
Apple will design the new chips, and Intel will manufacture them at factories in the United States, the President announced on Truth Social, reversing decades of policies that encouraged the offshoring of semiconductor production and returning more manufacturing activity to the U.S.
Combined with already announced projects that will see Intel collaborate with SpaceX(NASDAQ: SPCX) and Tesla(NASDAQ: TSLA) to manufacture AI chips and other semiconductors at the Terrafab megafactory, this latest project promises to kick-start a boom in domestic semiconductor manufacturing, reshoring capacity that had previously been offshored.
It could also prove a boon for Sandisk stock.
What this means for Sandisk
Dreams of limitless semiconductor sales are dancing like sugarplums in investors' brains. With the AI revolution in full swing, Intel shares are up 475% over the past 52 weeks. And because investors see Sandisk as integral to this revolution -- its memory chips are essential to helping AI chips perform inference and answer questions -- Sandisk stock has done even better, soaring 4,105%.
Can Sandisk's growth rate justify such a steep run-up? At 67 times earnings, I admit it looks a little pricey. The forward P/E looks more reasonable if Sandisk keeps growing. Just one stumble at Sandisk, though, and it's look out below!
Make sure to check your risk tolerance before investing in this one, Fool.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple, Intel, and Tesla. The Motley Fool has a disclosure policy.
