Key Takeaways
- SanDisk (SNDK) shares declined 8.08% Friday without an apparent negative catalyst
- Citi’s Asiya Merchant boosted her target price from $750 to $875 while reaffirming her Buy recommendation
- The analyst note came after Micron projected NAND supply will trail demand for an extended period
- SNDK has climbed over 201% in 2025 and approximately 1,200% over the trailing 12-month period
- Wall Street’s consensus target of ~$700 trails the stock’s current ~$734 price point
Shares of SanDisk tumbled more than 8% during Friday’s session, creating a puzzling scenario for market watchers as a prominent Wall Street analyst simultaneously increased her bullish outlook on the memory storage company. The disconnect has investors debating whether the selloff represents an attractive entry point or signals deeper concerns.
Asiya Merchant from Citi upgraded her price objective on SanDisk (SNDK) to $875 from her previous $750 estimate, maintaining her Buy recommendation. The revised target emerged following Micron’s recent quarterly results, where the company indicated NAND flash supply would remain constrained relative to demand throughout the coming periods. Merchant highlighted this supply-demand imbalance as a fundamental catalyst supporting her optimistic stance on SNDK.
Friday’s retreat notwithstanding, the storage company has delivered exceptional returns. SNDK shares have appreciated approximately 201% since the beginning of the year and have skyrocketed more than 1,200% over the past year. The company’s market capitalization now stands at roughly $114 billion.
The investment thesis for SanDisk revolves around artificial intelligence’s transformative impact on data storage requirements. Data centers have emerged as the dominant purchasers of NAND flash memory, eclipsing traditional end markets like smartphones and personal computers. CEO David Goeckeler disclosed that data center demand projections underwent consecutive upward revisions — initially from mid-20% expansion to mid-40% growth, followed by a further increase to mid-to-high 60% growth anticipated for calendar 2026.
Goeckeler emphasized that AI enterprises represent a fundamentally different customer type. Their storage consumption continues expanding irrespective of NAND pricing trends. “Their business model is not dependent on the volume of NAND they buy,” he noted during a recent industry conference.
Supply Constraints Meet Accelerating Demand
SanDisk delivered 64% quarter-over-quarter revenue growth in its data center segment during the most recent period, fueled by enterprise SSD certifications at leading hyperscale platforms translating into actual sales.
On the production front, capital expenditure for NAND manufacturing equipment has contracted even as market conditions tighten. Bringing new manufacturing capacity online requires multiple years of lead time. SanDisk has committed more than $1 billion to reserve fabrication facility capacity extending through 2030 to 2035 — signaling management’s conviction in persistent demand strength.
Executives also identified an emerging growth opportunity: key-value cache technology supporting AI inference workloads. Preliminary projections suggest this application could generate incremental demand ranging from 75 to 100 exabytes during 2027 alone.
Strategic Shift to Long-Duration Contracts
Instead of transacting on a quarterly basis, SanDisk is transitioning toward extended agreements with data center clients. These contracts spanning one to five years aim to stabilize profit margins throughout industry cycles while securing escalating capacity commitments measured in exabytes. The company has finalized one such arrangement and indicated additional agreements are under negotiation.
Wall Street forecasters project SanDisk’s revenue will expand 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 corresponding timeframe.
Among the 21 analysts monitoring SNDK, 14 assign it a Strong Buy rating, one maintains a Moderate Buy stance, and six recommend Hold. The consensus price target sits at $700.94 — trailing the stock’s current trading level around $734. This valuation discrepancy between analyst expectations and market pricing adds complexity for prospective investors evaluating Friday’s pullback.
Citi’s $875 projection represents the Street’s most optimistic outlook and exceeds the consensus by a substantial margin.
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