SanDisk (SNDK) Stock Soars to Record High Before Retreat — Is This a Buying Opportunity?

Key Takeaways

• SNDK reached a 52-week peak of $1,600 on May 11, finishing at $1,547.56 with a 552% year-to-date gain
• Datacenter revenue soared 233% quarter-over-quarter in Q3 fiscal 2026, fueled by AI-driven SSD adoption
• Shares fell approximately 8% on May 12, touching $1,402.27 after South Korea floated an AI profit tax proposal
• An insider offloaded $870,300 in shares while short positions have increased alongside the stock’s climb
• The company approved a $6 billion share repurchase program and reported $3.74 billion in cash with no outstanding debt

SanDisk (SNDK) Reaches Record $1,600 Before Tumbling on Tax Concerns

Sandisk Corporation, SNDK

SanDisk shares peaked at a 52-week high of $1,600 during trading on May 11, ultimately settling at $1,547.56. The semiconductor manufacturer had posted an impressive 552% year-to-date return entering Monday’s session, establishing itself as the top performer within the S&P 500 index.

However, Tuesday brought a different narrative.

SNDK plummeted approximately 8% during early May 12 trading, reaching an intraday bottom of $1,402.27. The catalyst was a Facebook post from Kim Yong-beom, South Korea’s presidential chief of staff, suggesting the country implement a specialized tax on AI companies to support a “national dividend” program.

The proposal remains unofficial and lacks formal policy backing. Critics within South Korea have already condemned the concept as “dangerous and irresponsible.” Nevertheless, in an environment where SNDK commands elevated valuations following a 552% surge, the announcement provided sufficient reason for investors to lock in profits.

The broader storage industry experienced similar pressure. Micron and Western Digital both declined more than 3%, while Seagate dropped over 1%. Major indices also retreated, with the S&P 500 falling 0.87%, the Dow sliding 0.56%, and the Nasdaq declining 1.51%.

Core Business Performance Remains Strong

Tuesday’s selloff didn’t alter the fundamental narrative. SanDisk’s datacenter segment posted a remarkable 233% sequential revenue increase in Q3 fiscal 2026 as cloud providers and corporate customers accelerated AI infrastructure deployments utilizing high-performance enterprise solid-state drives.

Executives have positioned NAND flash memory as essential AI infrastructure. Expanding artificial intelligence models, key-value cache needs, and retrieval-augmented generation applications all require substantial, high-speed storage capacity.

The company extended its partnership with Kioxia through December 2034 and allocated approximately $1 billion to Nanya to secure long-term DRAM availability. SanDisk has executed five multi-year New Business Model contracts supported by financial commitments exceeding $11 billion, with over one-third of fiscal 2027 production already secured through long-term arrangements.

For Q4 fiscal 2026, executives projected non-GAAP revenue between $7.75 billion and $8.25 billion, with gross margins ranging from 79% to 81% and earnings of $30.00 to $33.00 per share. The Zacks consensus estimate stands at $32.40 per share, representing a 76% increase over the past 30 days. This compares favorably to earnings of 29 cents per share during the corresponding quarter last year.

Potential Warning Signs

Not all indicators suggest continued upward momentum. A company director divested 579 SNDK shares on May 12, generating proceeds of $870,300 at $1,503.11 per share. Short interest has expanded consistently as the stock appreciated throughout 2026.

Multiple prominent Wall Street institutions — including RBC, Barclays, and Wells Fargo — have refrained from issuing buy recommendations despite the stock’s unprecedented performance.

SNDK currently trades at a forward price-to-sales multiple of 5.97x, exceeding the industry median of 3.96x and surpassing Micron’s 5.73x. Western Digital commands a 10.63x multiple while Seagate trades at 12.37x.

The company concluded Q3 with $3.74 billion in cash reserves, zero debt obligations, and $3.04 billion in operating cash flow. Capital expenditure totaled just $240 million, representing 4% of revenues for the quarter. The $6 billion stock buyback authorization continues to be available.

Despite Tuesday’s decline, SNDK still outperformed the S&P 500 by 3.45% during the session.

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