According to analytics firm S3 Partners LLC, short interest in Sandisk Corp. has surged for months, moving in tandem with the stock's sharp rally and elevating the risk of a short squeeze to what is described as an "extreme" level.
“Short sellers have moved in lockstep over the last few months, utilizing a reversal strategy by shorting aggressively into the rally,” the firm’s research team noted. Since the beginning of November, the proportion of shares sold short has jumped from around 4% to 7.5% of the available float. Concurrently, S3's proprietary short-squeeze risk metric has soared to 82.5. Mark-to-market losses for those holding short positions have ballooned to approximately $3 billion, a key factor pushing the risk score into extreme territory.
A short squeeze is a market phenomenon where a rapidly climbing stock price compels short sellers to repurchase borrowed shares to exit their positions, typically incurring losses. This wave of buying can, in turn, fuel a further acceleration in the stock's price.
Sandisk shares have skyrocketed an impressive 112% year-to-date, dramatically outperforming the S&P 500 Index's modest gain of about 1% and securing its position as one of the top performers within the index for 2026.
S3 attributes this powerful rally to a rotation within the artificial intelligence sector toward storage stocks, coupled with global flash memory shortages that have empowered the company to increase prices. Earlier this month, SanDisk received a significant boost after Nvidia Corp. CEO Jensen Huang emphasized the escalating demand for memory at the CES technology conference, labeling the storage market as "completely unserved."
Western Digital Corp. completed the spinoff of its flash-memory business in February 2025. Since its re-listing, shares of Sandisk have ascended by an astonishing 1,300%.