SanDisk stock (NASDAQ: SNDK) tanked roughly 20% on Thursday in a brutal reversal that caught many investors off guard.
The memory chip maker had been riding high just days earlier on strong Q1 earnings and exceptionally bullish guidance for Q2, with stock price targets from top analysts ranging as high as $230-$300.
Then came November 20th, when the stock simply gave up its gains amid a toxic combination of sector selloff pressures, fab cost concerns, and mounting worries over whether the NAND flash rally can be sustained.
For an AI-era winner that had climbed over 600% from its February 2025 spin-off from Western Digital, the sudden reversal exposed how fragile momentum can be when supply-demand dynamics shift and sectorwide profit-taking accelerates.
SanDisk stock: What triggered the sell-off
The immediate catalyst wasn’t new negative news about SanDisk itself.
Instead, investors weaponized the company’s own strength against it. SanDisk had just reported stellar first-quarter results, $2.31 billion in revenue, up 23% year-over-year, and EPS of $1.22 versus expectations of $0.58.
Management raised guidance aggressively, projecting Q2 EPS of $3.00–$3.40 (crushing consensus of $1.77) and revenue of $2.55–$2.65 billion.
On paper, this should have been celebratory. But beneath those numbers lay a real constraint: fabrication startup costs of roughly $60 million remain elevated, with additional underutilization charges of $10–$15 million dragging on near-term margins.
That’s where the anxiety began. Goldman Sachs analysts warned investors that while margins will “ramp significantly” as fab costs fade, the timing remains uncertain.
Margins are projected to hit only 29% in the current quarter, well below the Street’s 31.2% expectation.
In a sector obsessed with capex discipline and cash generation, even temporary margin compression can spook nervous capital.
Add to this the broader NAND market volatility.
Memory chip prices have surged dramatically, with Western Digital raising NAND contract prices 50% in November and spot prices on 1TB TLC NAND nearly doubling from $4.80 to $10.70 since July.
This level of pricing power is creating supply hoarding and margin uncertainty that makes investors jumpy.
The NAND market is now 5% undersupplied according to Goldman Sachs analysis, but with prices this high and rising, demand could crater just as quickly once customers complete inventory builds.
Where investors go from here
The Thursday plunge coincided with the broader tech sell-off triggered by Nvidia earnings confusion and jobs data disappointment.
SanDisk, despite its NAND-specific tailwinds, couldn’t escape the sector rotation away from growth names.
The stock traded on heavy volume, around 4.7 million shares by mid-session, well above average daily turnover, signaling panic liquidation rather than gradual profit-taking.
Trading well above its MarketBeat consensus price target of $183 with a stratospheric P/E ratio approaching 765x earnings at recent levels, SanDisk offers little margin of safety for momentum chasers.
Analyst views remain split. Bernstein and Fox Advisors maintain “strong-buy” ratings, arguing the NAND supply-demand tightness justifies premium valuations, while Weiss Ratings persists with a “sell” rating, citing valuation and execution risk.
For the stock to stabilize, Goldman Sachs suggests investors will need to see fab startup costs decline materially through 2026 and NAND pricing hold firm even as supplies tighten.
If either condition falters, if hyperscalers finish their AI infrastructure buildouts and reduce memory chip orders, or if competitors ramp production to capture high prices, SanDisk’s runway evaporates fast.
Thursday’s drop may ultimately prove a healthy reset, or it could signal the beginning of a longer correction as the NAND market’s temporary euphoria meets the cold reality of cyclical memory chip economics.
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