SanDisk Stock At $937: Why So Cheap

More on the AI trade: our AI storyline page collects our pieces on AI stocks.

If you bought a phone or laptop this fall and paid extra to step up from 256GB to 1TB, you've met SanDisk's business. The flash chips that hold your photos are the same kind AI data centers now buy by the rack, and their prices have kept rising.

That demand shows up in the sales. SanDisk took in $11.0 billion in the quarter to October 2, up 23% from the quarter before, and guided to $12.2 to $12.6 billion for the next. Analysts expect revenue to grow 146% in the fiscal year ending July 2027. Yet the stock closed Thursday at $937.46, 60% below its 52-week high.

An 81% cut in the multiple while the forecasts point up.

That cut reached beyond SanDisk holders. Memory stocks sit inside chip funds, AI funds and broad index funds, so a few-million-dollar portfolio can hold them more than once. Add it up in a free 30-minute call with a Trefis partner firm. Do you know your total?

Why Did Buyers Leave?

Memory is a commodity, and commodity makers are priced on the year after the peak: high prices bring new factories, and supply catches up. SanDisk guided to adjusted gross margins near 85% for this quarter. Margins like that are exactly what investors expect competition to erode.

The fear has had dated triggers. On October 12, reports of progress at China's CXMT knocked SanDisk down 6%. On November 5, as the AI-chip selloff spread, SanDisk lost 22.3% in one session, from $1,037.40 to $806.43. Bernstein, which has rated SanDisk outperform, said in May that it expects memory prices to stay strong into 2027, then start to normalize from the second half of 2027 into 2028. Investors are selling that 2028 now.

Source: Trefis, prices through Nov 12.

Where Do The Desks Meet?

On the AI desk, Nvidia fell 8% in five days to $166.19. (Is Nvidia stock now a bet on Jensen Huang?) Memory is the AI build-out's most cyclical leg; it swings hardest. On the macro desk, a hotter-than-expected October inflation report from the Labor Department on Tuesday, Nov 10, raised the odds of higher rates, which hurts the stocks priced furthest ahead. The big story is a collision: AI demand that looks unstoppable against a cycle that has always turned. (Why did memory stocks crash?)

What would bring buyers back: contract prices holding into 2027, more long-term supply deals (SanDisk says about half its fiscal 2027 output is already under them), and proof that AI inference needs far more storage than training did, still an open question.

The precedent cuts both ways. Micron has had 34 one-week falls of 15% or more since 2003. Typically it fell another 13.5% within three months, yet a year later it was higher in 19 of 29 cases, with a median gain of 17.9%.

What Can You Hold Either Way?

Position, not prediction. Size from the worst case already seen: at 1-3% of a portfolio, another 60% fall costs under 2%. To add, commit at a price: a cash-secured put at $700, expiring January 15, paid about $35.90 a share at Thursday's close (midpoint of the bid and ask), or $3,590 a contract, for a net cost near $664, 29% below Thursday's close and about 3.4 times sales. Each contract ties up $70,000, and you may have to buy at $700 even if the stock falls far below it. SanDisk's 8-for-1 stock split starts trading on Nov 20; listed options are normally adjusted to match, which makes this the same commitment at $87.50 a share. If you bought a year ago, the stock is still up 231%: trim back into the band. That replaces selling after a 22% day or buying the dip without a plan. Watch the next quarterly report against the $12.2-12.6 billion guide, and monthly NAND contract prices.

What Should You Ask Next?

• Coming up: does AI inference need more storage than training, and how much?
• Coming up: when Micron's stock bottomed in past cycles, where were memory prices?
• Coming up: how much SanDisk, Micron and Nvidia does a typical AI fund hold?

Would Your Plan Survive The Year Memory Prices Turn?

Cycles reward a plan made before the turn. Get a second opinion on your chip and AI exposure in a free 30-minute call with a Trefis partner firm.

For questions about this article or underlying research, email [email protected].