Forced Out of $5.6B in Sandisk, Leopold’s Bull Case Is Still Alive. Here’s How You Should Play It.

When a high-profile investor suddenly exits a stock, people immediately assume something is wrong with the company. In Sandisk’s (SNDK) case, the opposite appears to be true. A new regulatory filing shows that Situational Awareness — the AI-focused hedge fund run by former OpenAI researcher Leopold Aschenbrenner — built a large position in Sandisk during the second quarter, making it one of the fund’s biggest holdings at more than $5.6 billion. Then an AI-based selloff hit in July, and the fund took heavy losses, forcing Situational Awareness to offload much of its public portfolio to Ken Griffin’s Citadel.

The forced selling helps explain part of the brutal July slide for Sandisk, as from late June to late July, SNDK stock's price essentially halved. But this says nothing about the company itself. The selling came from a fund unwinding under pressure, not from anything breaking inside Sandisk’s business. If anything, the fundamentals have become even stronger. Sandisk recently posted the best quarter in its history, with revenue up 372% from a year ago and record gross margins.

Let's take a closer look.

Sandisk's Investor Day Made the Bigger Case

Quarter after quarter, due to the cyclical nature of the memory business, investors have remained cautious even as Sandisk continues to deliver record numbers. As I covered previously, Sandisk’s Investor Day on  Aug. 13 was the company's chance to prove this is more than another turn of the memory cycle.

The company didn’t disappoint. Management laid out a long-term model targeting mid-to-high-teens revenue growth and around 80% gross margins through 2030, backed by a new set of multiyear contracts. Eight customers have signed on, covering roughly half of Sandisk’s output in 2027. Deals like these provide visibility to investors, addressing their biggest concern. There are numbers to back that up, too. SNDK stock has surged 17% in the past five days alone, and has been further boosted by JPMorgan moving shares to an “Overweight” rating with a massive price target of $2,250. 

So, while the headlines focus on a fallen AI fund cutting its stake, there is a more important story here. Sandisk’s business is stronger than ever, and management is finally building a structure to make its earnings more durable.

A Cheap Stock, If You Believe the Cycle Is Breaking

The valuation looks extremely low for a company growing this fast. The forward price-to-earnings (P/E) ratio is 8.5 times, while the price-to-sales (P/S) ratio is 13 times. These numbers can’t be compared against Sandisk’s historical average, since the company only recently returned to strong profitability. Nonetheless, a single-digit earnings multiple for a company posting record earnings back-to-back is unusually cheap.

The reason isn’t anything new. Investors worry that the memory business has always been cyclical, and that the company’s boom may not last for long. This is in line with the EPS outlook as well. Analysts expect sharp growth of 201% in fiscal 2027, then slower growth of 21% in fiscal 2028.

The fear of EPS turning negative in a few years is exactly what management set out to challenge on Investor Day. The new fixed-price, multiyear contracts are designed to hold pricing steady through the next cycle. If management’s target of healthy revenue growth and strong gross margin through 2030 works out, the projected declines could well be too pessimistic. Plus, there is another positive to consider: Sandisk’s balance sheet is almost flawless. The company holds $4.76 billion in cash against zero debt. This is an ideal position to be in for a memory maker heading into heavy investment.

For investors, the debate remains the same. If the analyst consensus is right, the low multiple is justified. If management delivers on its contract-backed model, today’s price looks like a bargain.

About SNDK Stock 

Sandisk is a data storage company that makes products using NAND flash memory, the technology used to store data in devices without moving parts. The company offers solid-state drives for PCs, gaming consoles, and set-top boxes. It also offers flash-based embedded storage products for mobile phones, tablets, PCs, and other portable and wearable devices. Sandisk’s customers include computer makers, cloud and data-center operators, technology companies, distributors, retailers, and other businesses worldwide. Spun off from Western Digital (WDC) in 2025, the company is headquartered in Milpitas, California. 

Sandisk has delivered exceptional gains over the past 12 months, with SNDK stock climbing roughly 3400%. By comparison, the iShares Semiconductor ETF (SOXX) has generated gains of around 112% during the same timeframe. The rally has been driven by surging AI-related demand for memory and storage solutions, improving NAND pricing, and investor optimism following the company's spinoff from Western Digital.

Sandisk Guides for Revenue Growth

Sandisk reported its fourth-quarter fiscal 2026 earnings on Aug. 5. The company reported stronger-than-expected quarterly results with revenue of $8.97 billion, up 372% year-over-year (YOY). Data-center revenue was $2.98 billion, edge revenue was $5.43 billion, and consumer revenue was $556 million, down 32% sequentially. Non-GAAP EPS came in at $39.25, comfortably beating the Wall Street consensus of $34.59. The quarter also included a sharp rise in gross margin to 84.6%, compared with 78.4% in the prior quarter and 26.4% a year earlier. Adjusted free cash flow stood at $5.04 billion.

Looking forward, for Q1 2027, management expects revenue to be between $10.3 billion and $10.8 billion. Non-GAAP gross margin is expected to be between 83% and 85%. CFO Luis Visoso said that the company expects Q1 non-GAAP EPS between $44 and $46. For the full year, the company said capital spending should rise from fiscal 2026, mainly to support BiCS8 and BiCS10 ramps, while capital spending as a share of revenue should stay near 6%. Sandisk also said that New Business Model (NBM) agreements should account for more than 50% of bits in fiscal 2027 and about two-thirds of bits in fiscal 2028. 

What Do Analysts Expect for SNDK Stock?

Following the strong quarterly results, many analysts remain bullish on SNDK stock. Bernstein analyst Mark Newman recently reiterated a “Buy” rating with a price target of $3,000, while Joseph Moore of Morgan Stanley maintained a “Buy” rating with a price target of $1,750.

Based on 24 Wall Street analysts with coverage, SNDK stock holds a consensus “Strong Buy” rating. The mean price target of $2,139.09 suggests 36% potential upside from current levels, while the high price target of $3,000 implies potential upside of 91% from here. This reflects investor optimism around the long-term prospects of the company.