SanDisk experienced a significant selloff on Friday, falling approximately 13.5% to US$1,150.89 amid the broader Nasdaq market crash. The Nasdaq dropped 2.86%, its biggest single-day decline since June, as investors became increasingly concerned about excessive AI spending, technology valuations and the sustainability of future earnings growth.
However, I don’t think SanDisk’s long-term business fundamentals have suddenly deteriorated. In fact, the company reported an impressive quarterly revenue of US$11 billion, representing 378% year-on-year growth, and provided stronger-than-expected forward guidance. Demand for NAND storage from AI data centres remains an important growth driver.
The bigger concern is whether the current memory industry’s exceptional profit margins and selling prices can be sustained over the next few years. After such a massive rally, investors are also taking profits and becoming more cautious about valuations.
Personally, I would rather avoid chasing the stock at elevated prices. A major correction could provide a better opportunity to accumulate shares gradually at more reasonable valuations. SanDisk remains an interesting long-term AI storage investment, but patience and disciplined entry prices are essential. Strong companies can still be overpriced, and even excellent earnings cannot guarantee that their share prices will continue rising.
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