Sandisk Stock Is Down 30% From Its Peak: Is the Memory Winner Still a Screaming Buy Before September?

Sandisk (NASDAQ: SNDK) has had quite the run in 2026. Sandisk stock is up nearly 600% this year, although it's currently down around 30% from its highs. It reached its peak right before the calendar flipped to July, and a mid-year sell-off, likely inspired by profit-taking, caused the stock to plummet. However, it is recovering at a rapid pace.

The question is, can Sandisk sustain this rally to new highs, or is this a proper spot for the stock to trade at? Let's take a look at Sandisk's valuation and see if it's the right stock to buy now.

Image source: The Motley Fool.

The memory chip shortage boosted Sandisk's stock

Sandisk produces NAND memory and various products that utilize it. NAND memory is utilized for long-term data storage. While these come in a handful of varieties, the biggest use case so far has been in solid-state drives, which are often deployed in data centers. Sandisk and its peers cannot make enough NAND to meet demand from the artificial intelligence (AI) hyperscalers, which has caused prices to skyrocket over the past year. This has led to huge revenue and profit growth for Sandisk, and is the direct reason why the stock has been unstoppable in 2026.

But the market still doesn't respect its growth story. The memory chip market is cyclical, and once the supply crisis is resolved for memory chip makers, prices should come down. However, nobody knows to what level they will fall. As a result, the market is skeptical about Sandisk's unknown future, which is why it's priced so low.

SNDK PE Ratio (Forward) data by YCharts.

At just 7.6 times forward earnings, Sandisk stock is priced relatively low compared to its expectations. Almost no stocks involved in the AI sector trade for less than 20 times forward earnings, so if it can rise to that level, the stock could nearly triple from here. However, due to uncertainty about the future of the memory chip market, the stock has remained beaten down.

This will likely be the pattern for the foreseeable future, and the stock will likely only move following quarterly earnings reports after it has delivered a strong quarter. On the flip side, if memory demand starts to look weaker, then the stock will sell off.

I think the memory chip shortage will span several years, and SanDisk's stock will be an excellent buy and hold during that time. Investors will need to keep a watchful eye on the market's status, but if it stays strong, I'd expect Sandisk to be a huge winner.

Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.