Sandisk shares fell 7% on Monday as a selloff in memory stocks spread from Asia to U.S. markets. One analyst raised their price target to imply nearly 85% upside from current levels, creating a sharp divergence between price action and analyst sentiment.
Sandisk shares fell 7% on Monday as a broader semiconductor selloff swept through memory stocks, even as one analyst raised their price target to imply nearly 85% upside.
"The current memory upcycle is tracking substantially stronger than expected, but our base case continues to assume normalization in cycle dynamics," Lorraine Tan, a director at Morningstar, said.
The decline came as SK Hynix suffered its biggest one-day drop on record, plunging 15% in Seoul after a brokerage report suggested it may miss quarterly profit estimates. The jitters spread across the memory complex, with Micron falling 5.4%, Western Digital dropping 6.5% and Seagate declining 5% in premarket trading. Sandisk's selloff follows a 14% plunge on July 2 triggered by concerns over AI compute supply.
The divergence between the stock's decline and analyst optimism highlights the tension between near-term profit-taking and the long-term AI memory thesis. Sandisk reported fiscal third-quarter revenue of $5.95 billion, nearly doubling from the prior quarter, with adjusted gross margin surging to 78.4%. The company has signed $42 billion in minimum contracted revenue through multiyear supply agreements and guided for fiscal fourth-quarter revenue of $7.75 billion to $8.25 billion, with adjusted earnings per share of as much as $33.
Morningstar analyst William Kerwin expects memory prices to have risen more than 100% in Sandisk's just-ended fiscal 2026 and predicts a nearly 100% rise from there in fiscal 2027. At current levels, Sandisk trades at about 59 times trailing earnings, though that multiple compresses to roughly 12 times forward earnings based on management's guidance — the market pricing in a downturn that has yet to materialize.
The selloff highlights the memory sector's history of extreme cyclicality. Sandisk went from a $1 billion net profit in fiscal 2022 to a $2 billion net loss in fiscal 2023 during the last downcycle, and the company continues to invest over $1 billion annually in research and development regardless of market conditions.
The stock's decline puts Sandisk at a valuation that already discounts a cyclical downturn, even as its $42 billion contracted revenue backlog suggests demand remains robust. Investors will watch for any signs of softening in enterprise storage demand when the company reports fiscal fourth-quarter results in the coming weeks.
This article is for informational purposes only and does not constitute investment advice.
