After Falling Nearly 50%, Sandisk Stock Looks Compelling With 85% Upside Potential

Sandisk (SNDK) has taken a sharp hit after an extraordinary rally, falling 47% from its 52-week high and declining roughly 34% over the past month. Several factors are behind the recent weakness. After a steep run-up, profit-taking was inevitable, but investor concerns have also shifted toward the broader memory chip market.

Sandisk provides data storage devices and solutions based on NAND flash technology. The company is benefiting from growing demand for storage across AI workloads, data centers, edge computing, and consumer applications. Further, higher average selling prices have significantly boosted its revenue and earnings.

While SNDK is benefiting from higher volumes and pricing, one of the biggest concerns is increasing competition from Chinese memory manufacturers, which could put pressure on margins. Investors are also anticipating softer NAND pricing ahead, which could be a significant headwind for earnings.

The broader technology market has added to the pressure. Weakness across AI-related stocks, driven by concerns about whether enormous AI infrastructure investments will generate adequate long-term returns, has reduced risk appetite across the semiconductor sector. Even companies with strong AI-related growth opportunities have not been immune, losing notable value.

Despite the steep decline, Wall Street sentiment toward SNDK stock remains constructive. The average analyst price target stands at $2,245.40, compared with a recent closing price of $1,212.21. That implies a potential upside of approximately 85%.

The Selloff in SNDK Stock Created a Buying Opportunity

The recent selloff in SNDK stock has raised concerns about whether the company’s rapid growth is sustainable. However, the pullback may have already priced in much of that caution. While the stock has lost considerable value, Sandisk’s fundamentals remain strong, supported by rising NAND demand, higher pricing, and a substantial pipeline of long-term agreements.

Sandisk ended fiscal 2026 with significant strength. Moreover, the momentum will likely be sustained in fiscal, with the NAND market expanding rapidly, led by AI inference, which is driving significant demand for storage solutions.

This matters because AI workloads require substantial amounts of high-performance storage. As AI infrastructure expands beyond model training and increasingly supports inference at scale, storage requirements should rise in tandem with compute capacity.

Sandisk is already seeing demand outpace its available supply. Management expects bits to remain on allocation beyond calendar 2027, suggesting that tight supply conditions could continue supporting pricing and margins.

For the first quarter of fiscal 2027, Sandisk expects revenue of approximately $10.3 billion to $10.8 billion, with sequential growth driven by both bit growth and pricing. Adjusted EPS is expected to reach $44 to $46, implying another substantial increase from the prior year.

Supporting Sandisk’s outlook is its growing portfolio of new business models (NBMs). Sandisk now has NBM agreements with eight data center and edge customers, providing greater visibility into future demand.

Management expects NBMs to account for more than 50% of the company’s bits in fiscal 2027 and approximately two-thirds of bits in fiscal 2028. The financial commitment attached to these agreements is substantial. Sandisk estimates that the total revenue from its signed NBMs is at least $93.9 billion, assuming floor pricing. Management believes actual revenue could exceed that figure.

Despite these strong fundamentals, Sandisk’s stock has experienced a sharp correction. The decline has improved its risk-reward profile. At approximately 6.8 times forward earnings, the stock appears inexpensive relative to expected earnings growth. Wall Street expects Sandisk’s EPS to increase by approximately 170% in fiscal 2027, despite the company facing a difficult year-over-year comparison.

The Bottom Line

Sandisk’s sharp correction has improved its risk-reward profile. The company will benefit from strong AI-driven storage demand and solid pricing. The company’s expanding agreements, robust earnings growth, and low forward valuation leave room for substantial upside in SNDK stock.

Overall, Sandisk appears attractively positioned for long-term growth, with the current selloff potentially offering a compelling entry point.

On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.