SanDisk Stock Deep Dive: What's Fueling Flash Memory Giant SNDK's Rally, and Is It Still a Buy?

TradingKey - We remain bullish on SanDisk(SNDK.US)'s long-term growth potential. However, we believe current stock price expectations are too optimistic, with future upside significantly decelerating. A more prudent strategy for investors would be to await a valuation pullback and sustained confirmation of an industry upcycle before positioning, thereby enhancing the risk-reward ratio.

What Kind of Company is SanDisk?

SanDisk (Ticker: SNDK.US) is a U.S. company specializing in NAND flash and storage solutions, headquartered in Milpitas, California. The company was founded in 1988 by Eli Harari, Sanjay Mehrotra, and Jack Yuan.

Note: NAND flash is a type of non-volatile storage chip that retains data even without power, commonly found in SSDs, USB drives, memory cards, and mobile phones. It offers high capacity, low cost, and fast write speeds, though its read speed is slightly slower than NOR flash.

In 1995, SanDisk listed on NASDAQ, swiftly rising to become a consumer storage giant, with NAND flash at its core.

In 2000, it engaged in both collaboration and competition in NAND flash with Toshiba and Samsung. In October 2015, Western Digital (WDC) acquired SanDisk for approximately $19 billion.

In early 2025, Western Digital spun off its flash business as an independent public company under the SanDisk brand.

This explains why stock charts only display price movements from 2025 onwards.

SanDisk's product portfolio includes: USB flash drives, SD/microSD memory cards, consumer and enterprise SSDs (Solid State Drives), and embedded storage (for mobile phones, laptops, and data centers).

Its best-selling products include: SanDisk Extreme microSDXC cards, SanDisk Extreme Portable SSDs, and SanDisk Ultra microSD cards.

SanDisk Stock Performance?

[SanDisk Stock Price Chart, Source: TradingView]

While SanDisk's stock price appears robust, investors deeply involved in the market know its volatility significantly exceeds most technology stocks.

Following its IPO, SanDisk's stock surged amid the explosive demand for storage driven by AI. In the first 21 trading days post-IPO, the stock gained over 65% (during which Nvidia (NVDA.US) fell by more than 10%).

However, on April 3rd and 4th, the stock plummeted over 40% in two trading days, as global markets broadly declined due to the impact of global tariffs imposed by the Trump administration. It was even briefly ranked among the ten worst-performing tech stocks.

This was followed by a lengthy recovery phase, with the stock reclaiming its previous high on September 4, 2025, and subsequently initiating a major uptrend.

As of the close on November 13th ET, SanDisk's stock has surged over 700% from its offering price, while the broader memory sector gained only 60% during the same period.

As the stock price continues its relentless ascent, any slight market fluctuation can trigger significant volatility.

With increased vulnerability at elevated valuations and prominent short-seller Michael Burry reportedly betting against AI leaders, Japanese memory chip giant Kioxia's earnings disappointment triggered a sector-wide impact across the U.S. memory segment.

On Thursday, Kioxia Holdings reported an adjusted net profit plunge of over 60% year-over-year for its second fiscal quarter, leading to a broad sell-off in U.S. memory stocks. SanDisk consequently dropped nearly 14%.

Why Has SanDisk's Stock Soared?

1. Valuation Reset Logic

The primary catalyst for SanDisk's recent rally was the spin-off and independent listing of its flash business by parent company Western Digital in early 2025. Previously, SanDisk's flash operations were long tied to the low-growth HDD (Hard Disk Drive) business, significantly suppressing its valuation. Following the spin-off, the market began to re-rate SanDisk using the logic of a pure-play memory chip company, shifting its valuation framework from traditional "hardware manufacturing" to that of a growth-oriented semiconductor company (particularly within the NAND sector).

Key changes are reflected in three points:

• Valuation System Shift: From low HDD valuations (low P/S, P/E ratios) to a higher valuation system for NAND and AI data storage.
• Separation of Financial and Growth Logic: SanDisk is no longer weighed down by the cycles of Western Digital (WD) and its HDD business.
• Investor Base Transformation: Attracting increased holdings from funds focused on semiconductors, AI infrastructure, and data centers.

2. Exploding Demand for Memory Chips

SanDisk's performance is closely tied to the NAND (flash memory) pricing cycle.

From late 2024 to 2025, the memory industry experienced a clear supply-demand reversal—strong demand coupled with capacity contraction—leading to simultaneous increases in NAND contract and spot prices. This has ushered the industry into a new pricing upcycle:

Three forces driving the exploding demand:

(1) AI Data Center Expansion Driving Explosive High-Density SSD Demand

As AI models grow in scale, data centers, particularly those utilizing H100/H200 clusters, require a vast amount of high-performance enterprise-grade SSDs. Enterprise storage commands significantly higher average selling prices and profit margins than consumer-grade products, making it the most critical revenue stream for SanDisk.

(2) Rebounding Storage Demand for Mobile Phones, PCs, and Gaming Consoles

Smartphone shipments are recovering after two years of sluggishness, with flagship models generally increasing baseline storage capacity (starting at 256GB). Gaming consoles like the PS5 and Xbox have also fully transitioned to SSDs.

(3) Ongoing Production Cuts by NAND Manufacturers Fueling the Upcycle

Major NAND manufacturers, including Samsung, Micron, and Kioxia, have actively cut production over the past two years. This led to a rapid inventory drawdown, propelling NAND prices into a sustained upward trend.

3. Transformation into a Growth-Oriented Tech Stock

Previously, investors perceived SanDisk as merely a "USB drive and SD card company." However, following its spin-off, SanDisk is accelerating its pivot towards high-margin, high-growth technology attributes:

Key transformation areas include:

(1) Continuous Increase in Enterprise Storage Contribution

Data center-grade products (enterprise SSDs) offer significantly higher gross margins than consumer products. SanDisk is therefore reallocating resources towards these higher-margin businesses.

(2) AI Era Driving Demand for "High-Performance NAND"

AI does not solely rely on GPUs; it also requires

• High-bandwidth, high-capacity fast storage
• Data preprocessing cache
• Model fragment storage

(3) Entering a "Recovery Growth Phase" After the Inventory Destocking Cycle

After experiencing a deep inventory destocking cycle in 2023–2024, the entire memory industry has entered a phase of "simultaneous price and demand recovery." SanDisk has emerged as one of the most prominent turnaround plays.

Is Now a Good Time to Buy SanDisk Stock?

Current market volatility has intensified, and short-term risks have notably risen. Particularly as the memory industry's profitability has not yet fully materialized, while related stock prices have already priced in optimistic expectations, the current valuation premium may struggle to support further significant gains.

[SanDisk 2026 Q1 Quarterly Earnings Report, Source: investor.sandisk.com]

From SanDisk's earnings report, we note its partnership with Kioxia Holdings in developing flash memory. Given Kioxia Holdings' reported adjusted net profit plunging over 60% year-over-year and its stock price falling significantly, investors are questioning the returns generated from this collaboration.

We anticipate significant near-term pullback pressure, and investors should remain wary of rapid corrections driven by sentiment shifts.

From a medium-to-long-term perspective, while we maintain a constructive view on NAND storage demand trends, the AI data center expansion cycle, and profit recovery post-industry supply-demand rebalancing, it is crucial to acknowledge that current stock prices have largely, if not fully, priced in consensus market expectations. If future earnings guidance consistently fails to exceed expectations, or if end-market demand growth underperforms, the stock's upside potential will be further constrained.

Summary:

We remain optimistic about SanDisk's long-term growth potential, but believe current stock price expectations are overly ambitious, indicating a significantly slower upside trajectory ahead. Therefore, a more prudent strategy for investors would be to await a valuation pullback and sustained confirmation of industry strength before entering positions, thereby enhancing the risk-reward ratio.