Why Sandisk Stock Is Still Dropping
Key Points
TSMC earnings news sparked a sell-off in semiconductors today.
TSMC's news isn't necessarily bad news for Sandisk.
To the contrary, more investment by TSMC speaks to continued demand for AI memory chips.
- 10 stocks we like better than Sandisk ›
Sandisk (NASDAQ: SNDK) stock sold off for a second straight day Thursday -- but why?
Shares of NAND semiconductor memory chip manufacturer tumbled 9.6% through 11:15 a.m. ET after Taiwan Semiconductor Manufacturing Company (NYSE: TSM) beat analyst estimates in its Q2 earnings report, growing profits 77% year over year. But TSMC also warned investors will spend upwards of $60 billion on capital investment this year, versus prior forecasts of about $54 billion.
Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue »
Image source: Getty Images.
Good news for TSMC isn't bad news for Sandisk
Investors punished TSMC with a 2.2% sell-off today despite the good earnings news -- worrying TSMC's spending too much expanding capacity, and hurting its free cash flow. And yet, many of the chips TSMC is producing are CPUs and GPUs for artificial intelligence customers, and these chips will need to be paired with NAND flash memory chips from Sandisk to perform their functions.
In other words, more investment and more chip production from TSMC should increase demand for Sandisk chips and increase Sandisk's profits.
What's next for Sandisk
Viewed from that perspective, TSMC's decision to invest heavily in expanding chip production for its customers isn't bad news for Sandisk at all. It speaks to the continued strength of demand for semiconductor chips to AI applications, and supports the thesis that demand for memory chips (for the same purpose) continues to grow -- and Sandisk's profits alongside.
Granted, Sandisk's profits can't expand forever. Granted, competition is growing, and TSMC's investment plans are a big example of how other companies -- including Sandisk's competitors -- are expanding production. Eventually, this will result in the usual cyclical effect of supply catching up with demand, chip prices falling, and profit margins eroding.
But that's not happening today. For the time being at least, Sandisk's profits look safe.
Should you buy stock in Sandisk right now?
Before you buy stock in Sandisk, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Sandisk wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $397,351!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,304,257!*
Now, it’s worth noting Stock Advisor’s total average return is 937% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 16, 2026.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
Recommended Articles
