SanDisk (NASDAQ: SNDK) soared another 22% this morning as talks of “memory chip shortage” and the related price hikes continued to drive investors to the multinational based out of Milpitas, CA.
SNDK is broadly seen as a major enabler of artificial intelligence (AI) – a narrative that’s, in fact, catalysed a near-9x rally in its stock price in the trailing 12 months.
But could it (SanDisk stock) replicate its outperformance in 2025? Perhaps not – and there are two big reasons why!
NAND market peak could hurt SanDisk stock in 2026
SNDK shares’ meteoric rally has been related primarily to a supply-constrained NAND market, where scarcity has driven prices higher.
However, such dynamics are seldom permanent. In fact, history shows that they often signal a peak – with the risk of a supply glut forming in the aftermath.
If this were to play out in the NAND market this year, SanDisk could see its margins erode and its multiple shrink over the next 12 months.
Simply put – in that scenario – the Nasdaq-listed firm will struggle to justify its premium multiple, leaving investors exposed to the downside of a classic boom-and-bust memory cycle.
SNDK shares are no longer inexpensive to own
SanDisk is growing at a remarkable pace – with revenue up 21% sequentially in the latest reported quarter.
However, the aforementioned cosmic run in its stock price may have baked that in already. At the time of writing, SNDK is going for about 22x forward earnings – well ahead of its memory market peers.
Micron, for example, is trading at a forward price-to-earnings (P/E) ratio of less than 10 currently, according to Barchart.
The valuation dynamic looks all the more significant amid lingering concerns of AI overspending. If sentiment cools, SanDisk shares’ premium multiple could unwind rather quickly in 2026.
How Wall Street recommends playing SanDisk
Wall Street analysts also seem to believe that SNDK stock has gotten a bit ahead of itself after all.
While the consensus rating on the memory chip manufacturer remains at “moderate buy”, the mean target of about $271 suggests a potential “downside” of about 20% from here.
More importantly, options contracts expiring mid-June currently signal a massive crash in SanDisk to about $185 only in the first half of 2026.
All in all, the question isn’t whether or not SNDK can push higher over the next 12 months – it’s “are there not better valued investments to play the memory chip market strength this year?”
When a stock delivers nearly 9x gains within a year, it’s only prudent to cut exposure and redeploy that capital on other promising names that haven’t had their run already.
Note that SanDisk doesn’t currently pay a dividend to appear more attractive to income-focused investors either.
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