Shares of SanDisk Corp. (SNDK.US) plummeted on Wednesday, closing down over 10%. This drop occurred despite Bank of America raising its price target for the memory chip company earlier that day, citing a worsening global imbalance between NAND flash supply and demand. The bank's action was insufficient to stem the market's selling pressure. At the close, SanDisk was trading at $2,032.22, marking a 10.6% decline. In after-hours trading, the stock fell a further 1.78% to $1,996.
The sell-off was severe across the memory sector. A key U.S. stock memory sector index plunged nearly 9% intraday. Kioxia ADRs tumbled over 10%, Micron Technology fell close to 9%, and both Western Digital and Seagate Technology dropped more than 8%. This downturn comes at the start of the second half of the year, following an astonishing rally in memory chip stocks in the first half. Data shows SanDisk surged approximately 858% in H1, leading gains among S&P 500 constituents. Micron Technology rose over 300% in the same period, with its market capitalization briefly surpassing the $1 trillion mark. The Philadelphia Semiconductor Index soared 87.75% in Q2, its largest quarterly gain on record.
Since its spin-off from Western Digital and independent listing in February 2025, SanDisk's share price has skyrocketed more than 760%, making it one of the best-performing stocks in the S&P 500 in 2026. Founded in 1988 and headquartered in Milpitas, California, SanDisk is one of the world's top five NAND flash memory semiconductor suppliers. It was acquired by Western Digital in 2016 before being spun off in February 2025 to become a pure-play memory company focused on NAND flash.
Nearly all of SanDisk's flash memory chips are produced at Japanese manufacturing sites through a joint venture framework with Kioxia. Most chips are then repackaged into solid-state drives (SSDs) for use in consumer electronics, external storage, or cloud storage. The company's revenue was approximately $7 billion in fiscal 2025, is projected to rise to $20 billion in fiscal 2026, and market expectations point to $45 billion for the following year.
Multiple Negative Catalysts Converge: Meta Report Triggers "Shovel Seller" Narrative Reversal
Market observers identified one key trigger for the chip sector's weakness on Wednesday: a report that Meta Platforms is considering selling excess cloud computing capacity. Gil Luria, Managing Director at D.A. Davidson, noted this news prompted investors to question whether increased availability of computing resources could dampen demand for new data center construction. As one of the world's top five computing capacity customers, any adjustment to Meta's data center expansion plans could ripple through the entire supply chain.
The market quickly interpreted this as a signal that capital expenditure on AI infrastructure by major tech firms might be peaking. Investors fear that high-performance memory and computing chips, currently facing supply bottlenecks, could soon face oversupply, leading to heavy selling of semiconductor stocks.
Additionally, on June 29, the world's three largest memory suppliers—Samsung Electronics, SK Hynix, and Micron Technology—were hit with a class-action lawsuit alleging they conspired to manipulate memory prices and restrict global supply. On the same day, the South Korean government announced its largest-ever memory chip expansion plan, with Samsung Group and SK Group each planning to build two chip plants—four in total—with a combined investment of around 800 trillion won.
The convergence of these negative factors dealt a heavy blow to the memory chip sector at the start of the week. Analysts suggest the current decline is more a case of profit-taking following an unprecedented rally rather than a significant deterioration in industry fundamentals. After an epic surge in Q2, memory stocks became one of the most concentrated AI-related holdings for institutions. In the absence of new major catalysts, significant funds are choosing to lock in gains.
Bank of America's Contrarian Target Hike: NAND Shortage Seen Lasting Until Mid-2027
Recently, Bank of America sharply raised its price target for SanDisk from $2,100 to $2,500, reiterating its "Buy" rating. Analyst Wamsi Mohan stated in a client note, "We expect the NAND market supply-demand imbalance to persist through 2027, with the strong pricing cycle potentially extending further (through mid-2027), though quarterly sequential price increases will gradually moderate."
He further calculated that SanDisk's bit shipments grew 13% sequentially in the June quarter, with the average selling price (ASP) rising 35% quarter-over-quarter. "This bit growth rate is higher than the recent NAND bit growth disclosed by competitor Micron Technology, but the ASP increase is lower than Micron's. SanDisk's actual price increase will depend on product mix and other factors, including the scale of NBM contracts signed in the quarter (these contracts have short-term locked pricing but are more flexible long-term)."
Notably, just on Tuesday, Bernstein analysts raised their SanDisk target price dramatically by 76%, from $1,700 to $3,000, implying about 46% upside from the prior day's close. This fueled an 10.9% surge in SanDisk's stock on Tuesday. Bernstein's upgrade was not based on more aggressive short-term price forecasts but on a deeper conviction: new-generation Long-Term Agreements (LTAs) are fundamentally changing the memory industry's business model.
SanDisk has signed five LTAs with a total contract value of approximately $69.3 billion, with customers providing over $11 billion in upfront financial commitments. This model significantly reduces earnings volatility, driving a re-rating of the valuation framework.
Industry Outlook: Structural Gap Hard to Fill Quickly; Super-Cycle Thesis Intact
From an industry fundamentals perspective, most institutions maintain an optimistic view on the memory sector's upcycle. Counterpoint Research data shows SanDisk held a 13% share of the global NAND flash market in Q1 2026. TrendForce notes that major NAND suppliers have virtually no new capacity additions planned for 2026, with supply shortages expected to persist throughout the year. Gartner forecasts NAND flash prices will rise 234% this year, with no substantial relief expected before the end of 2027.
Micron's earnings report also confirmed NAND business revenue grew over 360% year-over-year, with management indicating tight industry conditions could last into 2027. Morgan Stanley previously raised its SanDisk target to $1,750, stating it expects memory supply tightness to last at least two to three years.
There are dissenting voices among analysts. Jay Woods, Chief Market Strategist at Freedom Capital, believes the semiconductor sector's weakness will not last long. "We believe the main theme for the second half of this year will still be capital rotation. High-flying tech stocks will likely enter a consolidation phase in the coming quarter before potentially breaking through previous highs again by year-end."
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