TLDR
- SNDK reached a 52-week peak of $1,600 on May 11, settling at $1,547.56, representing a 552% gain year to date
- Datacenter segment revenues soared 233% quarter-over-quarter in Q3 fiscal 2026, fueled by AI-driven SSD demand
- Shares fell approximately 8% on May 12, dropping to $1,402.27 intraday, triggered by South Korea’s proposed AI taxation
- An insider sold nearly $870,300 in shares, while short positions have increased alongside the stock’s rally
- The company approved a $6 billion share repurchase program and closed Q3 with $3.74 billion cash and no debt
SanDisk (SNDK) Reaches $1,600 Before Tumbling 8% Amid AI Tax Concerns
Shares of SanDisk touched a 52-week peak of $1,600 on May 11, ultimately finishing the session at $1,547.56. The memory and storage specialist had climbed 552% year to date entering Monday’s trading — far outpacing every other S&P 500 constituent.
But Tuesday brought a different narrative.
SNDK plunged 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 targeted tax on AI companies to finance a “national dividend” program.
The suggestion hasn’t become formal policy. Critics within South Korea have already labeled the concept “dangerous and irresponsible.” However, following a 552% surge that pushed valuations to stratospheric levels, the mere possibility was sufficient to trigger widespread selling.
The broader storage industry felt the impact as well. Micron and Western Digital each declined more than 3%, while Seagate lost over 1%. Major indices also suffered, with the S&P 500 down 0.87%, the Dow losing 0.56%, and the Nasdaq falling 1.51%.
What’s Driving the Business
The pullback hasn’t altered the fundamental narrative. SanDisk’s datacenter division experienced explosive sequential growth of 233% in Q3 fiscal 2026 as cloud hyperscalers and enterprise customers accelerated AI infrastructure buildouts requiring high-speed enterprise SSDs.
Executives have positioned NAND flash memory as essential AI infrastructure. Expanding AI model sizes, key-value cache needs, and retrieval-augmented generation applications all require extensive, high-performance storage capacity.
The company extended its Kioxia joint venture partnership through December 2034 and invested approximately $1 billion in Nanya to secure long-term DRAM availability. SanDisk has finalized five multi-year New Business Model contracts supported by financial commitments exceeding $11 billion, with over one-third of fiscal 2027 production already locked in 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 per-share earnings of $30.00 to $33.00. The Zacks consensus estimate stands at $32.40 per share, reflecting a 76% increase over the past month. This compares dramatically to just 29 cents per share in the year-ago quarter.
Reasons for Caution
Not all indicators suggest continued upside. On May 12, a company director offloaded 579 SNDK shares for $870,300, averaging $1,503.11 per share. Short interest has grown consistently as the stock has advanced throughout 2026.
Several prominent Wall Street analysts — including those at RBC, Barclays, and Wells Fargo — have refrained from issuing buy recommendations despite the stock’s extraordinary performance.
SNDK currently trades at a forward price-to-sales ratio of 5.97x, exceeding the industry average of 3.96x and topping Micron’s 5.73x. Western Digital commands 10.63x 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 buyback authorization continues to be available.
Notwithstanding Tuesday’s decline, SNDK still outperformed the S&P 500 by 3.45% during the session.
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