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Why Sandisk Stock Bounced Back Friday
Key Points
Sandisk stock closed Thursday down 30% for the week.
Wall Street analysts see little sign of a slowdown in computer memory demand, however.
Long term, Sandisk may (or may not) have a problem. Short-term, its future looks secure.
Sandisk (NASDAQ:SNDK) investors have had a rough week so far -- but things are looking up.
No. 5 in global NAND flash memory production behind Samsung, SK Hynix, Micron, and Kioxia, Sandisk stock shed 30% through Thursday's close this week. But as of 10:40 a.m. ET Friday morning, the stock is up 4.4%.
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So why did Sandisk stock fall, and why is it bouncing back?
Image source: Getty Images.
Are data centers in trouble?
Because data centers.
Election 2026 put Democrats in control of both the U.S. Senate and the House and installed Democratic governors in all four states where data center construction is most active. Investors appear fearful that Democrats will tighten regulation on AI in general and data centers in particular. If that's the case, data center construction could slow, the sale of memory chips needed to build those data centers would also slow -- and Sandisk stock would fall.
But there's also a chance that none of this will happen -- or that if it does, it still won't hurt Sandisk immediately.
What's next for Sandisk
Citigroup says 2027 will see memory companies increase production 22%, while demand grows 26%, maintaining a supply-demand imbalance that should keep memory prices -- and Sandisk profits -- high.
This morning, analyst KC Rajkumar at LYNX Equity Strategies seconded that emotion, confirming that supply shortages, particularly in memory and flash markets, remain tight, and that Asian memory and flash markets aren't yet showing any drop-off in sales post-election.
Longer-term, the AI tide may turn well against data centers, slowing Sandisk's growth. But in the near term -- at least through 2027 -- Sandisk's future looks secure. Trading for less than 4x the profit it's expected to earn in 2027, Sandisk stock is too cheap to sell.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Micron Technology. The Motley Fool has a disclosure policy.