China Just Gave Sandisk Stock Investors a New Reason to Worry

Sandisk (SNDK) has been the most remarkable stock of the year. Shares climbed from a 52-week low of $40.10 to a high of $2,354.39 in late June, the sort of rise almost no established company ever sees. What caused this extraordinary surge was the supply constraints of memory chips. AI data centers need huge amounts of storage, and when the supply of memory chips could not keep up, prices soared. Sandisk sells those chips, so its revenue and profit exploded. Last quarter, sales jumped 251% from a year earlier, and margins nearly doubled.

That run has now reversed sharply. SNDK stock has fallen more than 48% from its 52-week high. Part of that is simple profit-taking. After a rise that steep, investors don’t need much of a reason to sell. 

The trigger this week was China. ChangXin Memory Technologies (CXMT) recently went public in Shanghai and the stock surged 466% on its first day. CXMT makes DRAM, a different type of memory than Sandisk’s NAND. However, the news was still enough to spook investors. If China can scale up this fast, the shortage that made Sandisk so profitable may not last. Meanwhile, a bigger worry for Sandisk is Yangtze Memory Technologies (YMTC) — China’s biggest NAND maker — which is also aiming to go public.

The developments in China have hit Sandisk worse than rivals like Micron (MU) and SK Hynix (SKHY), which make specialized memory that China cannot easily copy yet. Sandisk does not make specialized memory. It is a pure NAND maker with no premium business to fall back on if prices soften. That focus was the reason SNDK stock skyrocketed during the boom, and it is the reason shares are more exposed now.

The important part is that nothing has actually broken. Sandisk has already locked in $42 billion of future revenue through long-term contracts, covering much of next year’s output. Guidance also still points to roughly $8 billion in revenue next quarter. What has changed is not the business but what investors will pay for it. The market has started pricing in the day the memory shortage ends, even though it has not ended yet. Sandisk will report its next earnings on Aug. 5, and after its latest run, SNDK stock is set for a big move either way.

About Sandisk Stock

Sandisk operates as a developer and manufacturer of data-storage devices and solutions based on NAND flash technology. The company’s product portfolio includes embedded products, solid-state drives, USB drives, removable cards, and wafers and components. These products are used in gaming devices, personal computers, smartphones, automotive systems, data centers, and industrial applications. 

Sandisk stock has delivered exceptional gains over the past 12 months, with SNDK climbing roughly 2,800%. In comparison, the iShares Semiconductor ETF (SOXX) has generated gains of around 106% during the same timeframe. The rally was driven by a sharp shortage of NAND flash memory, a huge increase in revenue, and the company’s addition to the Nasdaq-100 in April. 

Sandisk’s valuation is difficult to assess using traditional measures. Having only traded as a standalone company since early 2025, it has no multiyear history to compare against. On its own, the forward price-to-earnings (P/E) ratio of 5.4 times looks cheap for a company growing this fast. The reason it stays low is the same one weighing on the stock. The market does not believe the earnings will last.

The EPS outlook seems to be in line with this sentiment. Analysts expect massive earnings growth of 3,525% in fiscal 2026 and 188% in fiscal 2027 as the shortage runs its course. With the shortage eventually expected to end, though, growth is estimated to slow down in 2028 and 2029.

Meanwhile, the balance sheet is a genuine strength. Sandisk holds $3.7 billion in cash while being nearly debt-free. That gives it room to ride out the downturn that estimates already assume is coming. The low multiple is the market’s way of pricing a cyclical business at its peak. Whether SNDK stock is cheap depends entirely on how long the shortage holds. 

Data-Center Segment Continues to Lead Growth 

Sandisk reported its third-quarter fiscal 2026 earnings on April 30, generating revenue of $5.95 billion. This marked a 97% increase from the previous quarter and an impressive 251% year-over-year (YOY) gain. Growth was driven by higher pricing and a greater mix of sales to higher-value customers. The data-center segment led the quarter, with revenue rising 233% sequentially to $1.47 billion. Edge revenue also more than doubled to $3.66 billion. However, consumer revenue declined 10% sequentially to $820 million. 

Looking ahead, the company guided Q4 revenue of $7.75 billion to $8.25 billion. On a non-GAAP basis, gross margin is expected to range between 79% and 81%. Sandisk projects non-GAAP EPS to range from $30 to $33. Management also forecast non-GAAP operating expenses of $480 million to $500 million and tax expenses of $775 million to $875 million.  

What Do Analysts Expect for Sandisk Stock?

Analysts remain divided on Sandisk’s future outlook. Susquehanna analyst Mehdi Hosseini recently lowered his price target on SNDK stock from $3,250 to $3,050 while keeping a positive rating. In contrast, on July 21, Wells Fargo analyst Aaron Rakers raised his price target from $1,250 to $1,620 and maintained a “Hold” rating. 

Sandisk enjoys a consensus “Strong Buy” rating from 22 Wall Street analysts with coverage. The median price target of $2,376.65 suggests extraordinary potential upside of 94% from current levels. Meanwhile, the highest price target of $3,169 suggests the stock could gain as much as 159% from here.