{ "docId": "019dd923-622c-750b-8b98-491cf8c853e8", "docSlug": "3b36a8e60d92", "documentTitle": "Pure Storage, Inc. (PSTG)", "authorId": "53_Kerrisdale_Capital", "authorName": "Kerrisdale Capital", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2025-09-01 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 20, "pageCount": 35, "prevPage": 19, "nextPage": 21, "slideType": "villain_critique", "function": "name_villain", "density": "dense", "nDataPoints": 4, "notes": "Includes a quote from a Solidigm marketing executive to support the skepticism regarding flash adoption.", "elementsJson": [ "paragraph", "quote_block" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b98-491cf8c853e8/20", "deckHref": "/decks/019dd923-622c-750b-8b98-491cf8c853e8", "deckJsonHref": "/decks/019dd923-622c-750b-8b98-491cf8c853e8.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b98-491cf8c853e8#slide-20", "components": [ { "bbox": null, "kind": "callout", "text": "As a result, the industry would need to invest an incremental $200 billion to build the capacity to displace anticipated HDD exabyte shipments in 2027.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd952-fb90-708a-8691-7bdc092c5b82", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.6, "w": 0.76, "x": 0.118, "y": 0.315 }, "kind": "paragraph", "text": "As discussed in our recent analysis of Seagate, a high-level analysis of flash production economics suggests meaningful displacement of HDDs in the data center is unlikely. Over the past ten years, flash production has been 9x more capital intensive than HDD manufacturing, and data presented by SanDisk shows exabyte capacity growth is becoming more expensive to come by. As a result, the industry would need to invest an incremental $200 billion to build the capacity to displace anticipated HDD exabyte shipments in 2027. And if the flash industry agreed with Pure's outlook, it would certainly be taking action now to ramp capacity. However, thus far in 2025, all major flash suppliers have been cutting production and are expected to exercise continued supply discipline through the end of the year. Strong AI server demand (the bigger consumer of flash compared to storage) has been offset by weak consumer storage demand. Additionally, major supplier SanDisk sees a normalization of growth rates across all segments in 2026, which suggests they are not swayed by Pure's vision of HDD displacement. Similarly, in its recent FQ2 2025 earnings presentation, Micron noted that, despite the recent qualification of its G8 QLC for Pure's 150TB DFM, it is also addressing current NAND fab underutilization by pursuing a 10% structural reduction in flash wafer capacity exiting 2025. Another headwind to flash capacity expansion is the explosion in demand for HBM to support GPUs. Two of the largest flash suppliers. SK hynix and Micron, are also leading suppliers of high performance DRAM. They are shifting capacity away from flash to DRAM given its more attractive growth prospects and profitability. Finally, the flash industry serves many masters, perhaps the largest being Apple. iPhones may consume as much as 20% of total flash, and memory requirements for Apple Intelligence have nearly doubled to 7GB from initial capacities, driving demand for higher memory capacity SKUs.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "25fae20b-ea4b-4b9d-91ff-ad832dd999b2", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.76, "x": 0.118, "y": 0.09 }, "kind": "quote", "text": "be made that the majority of network attached storage for AI that's out there in the world is still on hard drives today. We'll have fairly technical conversations with folks building AI clusters... they just don't think that deeply about storage...", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9822269f-efae-4cb0-b129-891cec5823fc", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"We'll have fairly technical conversations with folks building AI clusters, and even if we can make a case about TCO or performance or energy efficiency or whatever the salient issues are for that customer or potential customer, at the end of the day they just don't think that deeply about storage...\" — Marketing executive at SSD supplier Solidigm", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd952-fb90-708a-8691-7e4973107094", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.45, "x": 0.118, "y": 0.275 }, "kind": "title", "text": "The Realities of Flash Undermine the Pure Pitch", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a97a0f30-7146-47bb-b572-a69c95e4897d", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [ { "to": 23, "from": 11, "beatId": "043f4323-8300-47cd-bd67-d0d7b1e3780a", "arcName": "Problem-Agitate-Solution", "arcSlug": "problem-agitate-solution", "beatName": "Preempt Rebuttal", "beatSlug": null, "evidence": "The document preempts potential rebuttals to its arguments", "position": 2, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 32, "from": 5, "name": "Cost Of Inaction", "slug": "27-cost-of-inaction", "bestFor": "Urgent budget requests, compliance, risk mitigation", "matchId": "f175e9df-40bd-4f68-b964-eed15e12ff5a", "evidence": "The document highlights the risks of investing in Pure Storage", "position": 0, "objective": "To highlight the risks of investing in Pure Storage", "structure": "The Status Quo -> The Hidden Costs Accumulating -> The Future State of Inaction -> The Tipping Point", "confidence": 0.7, "description": "Quantify what happens if the audience does nothing" }, { "to": 23, "from": 10, "name": "Quick Win Big Bet", "slug": "47-quick-win-big-bet", "bestFor": "Transformation planning, 100-day plans, resource allocation", "matchId": "7a3fb01b-6d25-4fa6-b338-aeb407c58cc3", "evidence": "The document presents an alternative view to Pure Storage's TCO analysis", "position": 1, "objective": "To present an alternative view to Pure Storage's TCO analysis", "structure": "The Full List -> Quick Wins (Low effort, High impact) -> Big Bets (High effort, High impact) -> Sequenced Roadmap", "confidence": 0.6, "description": "Separate initiatives into immediate wins and longer-term strategic bets" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }