Up 3,700%, Should You Buy Sandisk Right Now?

The appreciation of Sandisk (NASDAQ: SNDK) stock has been nothing short of phenomenal. Since its formal separation from Western Digital in February 2025, the stock has risen 3,700%, a feat unmatched by any large-cap stock over the same period.

Admittedly, no matter what its future holds, it is unlikely to repeat that growth within such a short time frame. However, history suggests that the chip stock is more likely to pull back than rise over time.

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The rise (and possible future decline) of Sandisk

Indeed, when Sandisk spun off, it did not appear to be on the verge of massive growth. The company specializes in NAND memory and solid-state storage products. In general, memory and storage are commoditized products, and thus, the companies in that business tend to not attract as much investor interest.

Nonetheless, the boom in AI centers led to unprecedented demand for flash storage solutions. The stock price surged as AI stock investors and institutional investors took notice. Soon after, Sandisk joined the Nasdaq-100 and the S&P 500, leading to additional buying.

The company's financials also played a major role in its gains. Its net income was over $11 billion in fiscal 2026, far better than the $1.6 billion loss in the previous fiscal year.

That profit left it with an attractive valuation despite its massive stock gains. Currently, its P/E ratio is 19, and the immediate future appears bright as its forward P/E stands at just 6.3.

Ironically, seasoned investors' long-term memory may explain the low valuations. These shareholders know that memory companies tend to experience more volatile industry cycles than tech stocks in general. This is because memory and storage command tremendous pricing power in boom times. However, when the down cycle begins, lower demand and price cuts can reduce or even wipe out company profits.

Sandisk has signed customers into long-term contracts, which could mitigate a down cycle. Still, slumps can be exceptionally painful for memory stocks. In the nearly nine years Western Digital owned Sandisk, its stock gained over 75%. Still, since it earned all of those gains in the first year of ownership, it is easy to see why Western Digital later doubted the wisdom of the merger and decided to spin off Sandisk.

The performance of both Sandisk and Western Digital stocks since the separation indicates the AI boom would have ended the slump with or without the separation. Still, performance in previous years suggests storage stocks have not performed well historically, possibly pointing to pain for Sandisk in the foreseeable future.

Should you buy Sandisk stock right now?

The history of Sandisk and its industry in general suggests one should approach its stock with caution.

With Sandisk dominating the S&P 500 in 2026, it implies that it is the stock to own. Still, the stocks in that industry have faced huge sell-offs once the boom ends. That history may also explain why investors have not bid the stock higher despite its 19 P/E ratio.

Indeed, if revenue forecasts prove accurate, Sandisk stock could continue rising. Nonetheless, given Sandisk's history and the history of the memory and storage industries in general, investors should probably assume they missed out on this boom.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Western Digital. The Motley Fool has a disclosure policy.