Key Takeaways
- Shares of SanDisk (SNDK) declined 8.08% on Friday without an obvious trigger
- Citi’s Asiya Merchant boosted her price target from $750 to $875 while maintaining a Buy recommendation
- The target increase came after Micron reported that NAND supply will trail demand for the extended future
- Despite Friday’s setback, SNDK has climbed more than 201% this year and approximately 1,200% over the trailing 12 months
- Wall Street’s consensus price target of roughly $700 trails the stock’s current level near $734
Shares of SanDisk experienced a steep decline on Friday, shedding more than 8% of their value, despite receiving an upgraded price target from a prominent Wall Street analyst. The disconnect between the analyst’s optimism and the market’s reaction has left market participants debating whether this represents a strategic entry point or a red flag.
Asiya Merchant, an analyst at Citi, increased her price objective for SanDisk (SNDK) to $875 from her previous $750 target while reaffirming her Buy stance. Her updated outlook came on the heels of Micron’s recent quarterly results, during which Micron indicated that NAND flash demand would outpace available supply for an extended timeframe. Merchant highlighted this supply-demand imbalance as a fundamental reason for maintaining confidence in SNDK.
Despite the weakness observed on Friday, the stock has delivered extraordinary returns. SNDK has appreciated approximately 201% since the start of the year and has rocketed more than 1,200% over the past year. The company’s market capitalization currently stands at roughly $114 billion.
The optimistic outlook for SanDisk is anchored in the explosive growth of AI-related data storage requirements. Data centers have emerged as the dominant purchasers of NAND flash memory, surpassing traditional markets like smartphones and personal computers. SanDisk’s CEO, David Goeckeler, noted that projections for data center demand underwent substantial upward revisions across two consecutive forecasting cycles — climbing from the mid-20% range to the mid-40s, and subsequently to the mid-to-high 60% range for the 2026 calendar year.
Goeckeler emphasized that artificial intelligence firms aren’t merely redistributing storage products. Their usage continues expanding independent of NAND pricing dynamics. “Their business model is not dependent on the volume of NAND they buy,” he remarked during a recent industry conference.
Constrained Supply Meets Accelerating Demand
SanDisk posted 64% quarter-over-quarter revenue growth in its data center segment last quarter, powered by enterprise solid-state drive certifications at leading hyperscale cloud providers translating into actual sales.
On the manufacturing front, capital expenditures for NAND production equipment have decreased even as market fundamentals strengthen. Bringing new fabrication capacity online requires multiple years of lead time. SanDisk has committed more than $1 billion to reserve manufacturing facility space extending through 2030 to 2035 — positioning itself for persistent demand growth.
Executives also identified a potential emerging growth catalyst: key-value cache solutions for AI inference workloads. Preliminary projections suggest this application alone could generate incremental demand of 75 to 100 exabytes during 2027.
Multi-Year Customer Agreements Taking Shape
Instead of transacting on a quarterly basis, SanDisk is transitioning toward extended partnership agreements with data center clients. These contracts, spanning one to five years, are structured to safeguard profit margins throughout market fluctuations and secure expanding capacity commitments measured in exabytes. The company has finalized one such arrangement and indicates additional agreements are under negotiation.
Wall Street analysts following SNDK project revenues climbing 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 providing coverage on SNDK, 14 assign it a Strong Buy rating, one rates it Moderate Buy, and six recommend Hold. The consensus price target stands at $700.94 — trailing the stock’s current trading level around $734. This disconnect between the average analyst target and the prevailing share price adds complexity to interpreting Friday’s decline for prospective investors.
Citi’s $875 projection represents the most aggressive outlook on Wall Street and substantially exceeds the analyst consensus.
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