Quick Summary
- Shares of SanDisk (SNDK) declined 8.08% on Friday with no obvious trigger for the selloff
- Citi’s Asiya Merchant boosted her price target to $875 from $750 while maintaining a Buy recommendation
- The revision came after Micron disclosed that NAND demand is expected to outstrip supply going forward
- Despite Friday’s retreat, SNDK remains up more than 201% in 2025 and approximately 1,200% over 12 months
- Consensus analyst target of roughly $700 trails the stock’s current level near $734
Shares of SanDisk tumbled more than 8% on Friday in a move that caught many off guard, particularly since a prominent Wall Street analyst had just upgraded her outlook on the memory storage company. The disconnect between the analyst’s optimism and the market’s reaction has investors debating whether this pullback presents an entry point or signals deeper concerns.
Asiya Merchant from Citi upgraded her SanDisk (SNDK) price objective to $875 from a previous $750 while reaffirming her Buy stance. Her analysis followed Micron’s recent quarterly results, where the company indicated that NAND flash demand would continue outpacing available supply in coming periods. Merchant highlighted this imbalance as a fundamental reason for maintaining a positive view on SNDK.
Friday’s decline notwithstanding, the stock has posted extraordinary gains. SNDK has climbed approximately 201% since the start of the year and has rocketed more than 1,200% over the trailing twelve-month period. The company’s market capitalization currently stands at about $114 billion.
The optimistic thesis for SanDisk revolves around artificial intelligence’s transformative impact on data storage needs. Data centers have emerged as the primary consumers of NAND flash memory, eclipsing traditional end markets like smartphones and personal computers. CEO David Goeckeler noted that data center demand projections have been revised upward dramatically across two successive planning cycles — initially from the mid-20% range to mid-40%, then again to the mid-to-high 60% range for calendar 2026.
Goeckeler emphasized that AI-focused enterprises aren’t merely reselling storage capacity. Their usage continues expanding irrespective of NAND pricing trends. “Their business model is not dependent on the volume of NAND they buy,” he explained during a recent industry event.
Constrained Supply Meets Accelerating Demand
SanDisk posted a 64% quarter-over-quarter increase in data center revenue during its most recent reporting period, fueled by enterprise solid-state drive certifications at leading hyperscale cloud providers converting into actual sales.
From a supply perspective, capital expenditure on NAND manufacturing equipment has decreased even as market dynamics tighten. Bringing new production capacity online requires multiple years. SanDisk has committed more than $1 billion to secure fabrication facility space extending through 2030 to 2035 — underscoring management’s confidence in durable demand trends.
Executives also identified a possible emerging growth catalyst: key-value cache solutions for AI inference workloads. Preliminary projections suggest this application alone could generate incremental demand totaling 75 to 100 exabytes by 2027.
Strategic Shift Toward Extended Contracts
Instead of transacting on a quarterly basis, SanDisk is transitioning toward extended agreements with its data center clientele. These contracts, ranging from one to five years, aim to stabilize margins through industry cycles while securing expanding exabyte commitments. The company has finalized one such agreement and indicated additional deals are under negotiation.
Wall Street analysts project SanDisk’s revenue will expand from $7.36 billion in fiscal 2025 to $26.78 billion by fiscal 2027. Earnings per share are anticipated to surge from $2.99 to $87.40 during the same timeframe.
Among the 21 analysts following SNDK, 14 assign a Strong Buy rating, one recommends Moderate Buy, and six maintain Hold positions. The consensus price target stands at $700.94 — trailing the stock’s current trading level around $734. This divergence between average analyst expectations and market pricing adds complexity to evaluating Friday’s selloff as a potential opportunity.
Citi’s $875 projection represents the most aggressive target among tracked analysts and substantially exceeds the Street consensus.
