SanDisk (SNDK) Stock Drops 8% — But Citi Recommends Buying Despite the Decline

TLDR

• SanDisk (SNDK) shares declined 8.08% on Friday without an obvious catalyst
• Citi analyst Asiya Merchant increased her price target from $750 to $875, maintaining a Buy rating
• The revised target came after Micron’s earnings report indicated NAND demand will outpace supply for the foreseeable future
• SNDK remains up more than 201% for the year and approximately 1,200% over the last 12 months
• The average analyst price target of ~$700 is below the current share price of ~$734

(SeaPRwire) –   SanDisk stock experienced a significant decline on Friday, losing over 8% of its value, even as a leading Wall Street analyst increased her price target. This left investors questioning if the downturn represents a chance to buy or a cause for concern.

Sandisk Corporation, SNDK

Citi analyst Asiya Merchant raised her price target for SanDisk (SNDK) to $875 from $750, reaffirming a Buy rating. Her update followed Micron’s recent earnings report, where Micron projected that NAND demand would surpass supply going forward. Merchant cited this supply-demand imbalance as a fundamental reason for her positive outlook on SNDK.

In spite of Friday’s drop, the stock has performed exceptionally well. SNDK has gained about 201% since the start of the year and has skyrocketed more than 1,200% in the past year. The company now has a market capitalization of approximately $114 billion.

The optimistic view of SanDisk is based on a surge in data storage demand driven by artificial intelligence. Data centers have become the primary purchasers of NAND flash memory, surpassing smartphones and personal computers. SanDisk CEO David Goeckeler stated that data center demand projections were increased significantly over two consecutive cycles — from mid-20% growth to mid-40%, and then to mid-to-high 60% growth for calendar year 2026.

Goeckeler clarified that AI firms are not merely reselling storage. Their usage continues to increase independent of NAND pricing. “Their business model is not dependent on the volume of NAND they buy,” he remarked at a recent conference.

Supply Tightening, Demand Growing

SanDisk announced a 64% sequential increase in data center revenue last quarter, fueled by enterprise SSD qualifications at major hyperscalers turning into actual sales.

Regarding supply, capital expenditure for NAND equipment has decreased even as market conditions become more constrained. Building new production capacity is a multi-year process. SanDisk has allocated over $1 billion to secure fabrication plant space through 2030 to 2035 — a long-term wager on continuing demand.

The company’s management also highlighted a potential new growth area: key-value cache technology for AI inference. Preliminary estimates suggest this application could generate an additional 75 to 100 exabytes of demand in 2027 alone.

Long-Term Deals in the Works

Instead of selling supply on a quarterly basis, SanDisk is transitioning to multi-year agreements with data center clients. These one-to-five-year contracts are intended to safeguard profit margins through market cycles and secure increasing commitments for storage capacity. The company has already finalized one such agreement and reports that others are underway.

Analysts following SNDK project revenue will grow from $7.36 billion in fiscal 2025 to $26.78 billion in fiscal 2027. Earnings per share are anticipated to rise from $2.99 to $87.40 during the same timeframe.

Among the 21 analysts covering SNDK, 14 assign a Strong Buy rating, one gives a Moderate Buy, and six recommend Hold. The average price target is $700.94, which is lower than the current trading price near $734. This discrepancy between the average target and the present price adds complexity for potential buyers considering Friday’s dip.

Citi’s $875 target continues to be the most optimistic on Wall Street and is significantly higher than the consensus.