‘Peak Memory’ Panic Is ‘Overblown’ Says Mizuho: Buy the Sandisk Stock Dip

Mizuho Securities (MFG) recently announced that the dip in memory stocks offers a “Buy” opportunity, especially for Micron (MU) and SanDisk Corporation (SNDK). But this isn’t just another ‘buy the dip’ call. The firm explains the bull thesis in a way that every investor, especially those scared of volatility and buying at peak, needs to listen to.

After calling the fears about declining memory usage in AI infrastructure ‘overblown’, analysts at Mizuho explained that TurboQuant’s success is a bull thesis, not a bear thesis, as many are calling it out to be. Vijay Rakesh, in a note to clients, pointed out that improvements in technology often result in an increase in demand rather than a decrease. For instance, virtual machines were expected to reduce server demand, but had the opposite impact. DeepSeek’s low-cost AI training gave rise to fears that companies in the U.S. might be overspending. While that was true, the low cost only resulted in an accelerated AI growth, resulting in even higher spending, especially from the likes of Microsoft (MSFT), OpenAI, and Meta Platforms (META). Similarly, the use of fiber optics instead of copper may offer 10 times the bandwidth, but this could again result in higher spending rather than lower.

These are valid points and considering how early we are in AI development, it is unlikely that memory demand will go down just because algorithms have changed the ways in which data is processed. It only means we can process more informatin at a time, allowing us to progress faster. There is no reason to slow down progress and save on memory costs when AI is quite literally a winner takes all race for the most part. 

About SanDisk Stock

Headquartered in Milpitas, California, SanDisk is engaged in providing high-performance memory and storage solutions, offering solid state drives for gaming consoles, PCs, and desktops. Its end clients include businesses, IT organizations, individual consumers, mobile devices, and embedded systems markets as well as device manufacturers.

The release of TurboQuant algorithm caused a significant decline in SNDK stock’s value but it has recovered well so far this month returning 13.3%. The volatility in the stock continues to provide an attractive entry point to investors who believe the memory demand isn’t going away anytime soon.

SanDisk’s earnings growth has been staggering, yet it only trades at a forward price-to-earnings of 18.07 times, well below the S&P 500 Index’s forward price-to-earnings of just above 21 times. Looking at the consensus earnings growth expectations of 118% in 2027 and negative in 2028, one can understand the pessimism. The market believes the memory demand will go down. However, we know that this also means companies will be reluctant to increase capacity when the market expects a decline in demand. If the supply constraints are likely to stay, all investors need is the Mizuho bull thesis to play out, resulting in a “Buy and Hold” strategy ideal at current levels.

SanDisk Delivers Strong Earnings

For the second quarter of 2026, revenue came in at $3,025 billion, which surpassed the company’s own projections. This showed a 31% growth from the previous quarter and 61% rise year-over-year (YOY). Segment-wise, Edge revenue was $1,678 million, consumer sales $907 million, and data center revenue clocked in at $440 million, with a progressive increase of 64% from the previous quarter. Non-GAAP gross margin surged to 51.1% as compared to the previous quarter’s 29.9%. Non-GAAP earnings per share increased to $6.20 from $1.22, as compared to the previous quarter. 

The company reduced its debt by $750 million, and closed the quarter with $1,539 million in cash and $603 million in debt. This strengthening of the balance sheet is vital for a company operating in a sector known for its extreme cyclical nature.

What Are Analysts Saying About SanDisk Stock

After the recent recovery in stock price, SanDisk stock is closing in on its mean target price of $752.24, as per estimates from 20 different analysts. This suggests the valuation discount is narrowing and the market may well be waking up to the scenario Mizuho and other analysts have pointed to. In the last two weeks, three different analysts have assigned price targets of $875, $900, and $1000, which suggests the sentiment may be turning bullish again.