SanDisk (SNDK) Stock Hits All-Time High Then Pulls Back — Buy the Dip?

TLDR

• SNDK hit a 52-week high of $1,600 on May 11, closing at $1,547.56, up 552% year to date
• Datacenter revenues jumped 233% sequentially in Q3 fiscal 2026, driven by AI SSD deployments
• The stock dropped ~8% on May 12, hitting a session low of $1,402.27, dragged by a proposed South Korean AI profit tax
• A company director sold $870,300 worth of stock, and short interest has risen as the stock climbed
• SNDK authorized a $6 billion buyback and ended Q3 with $3.74 billion in cash and zero debt

SanDisk (SNDK) Stock Hits $1,600 High Then Slides 8% on AI Tax Proposal

Sandisk Corporation, SNDK

SanDisk hit a 52-week high of $1,600 on May 11 before closing at $1,547.56. The stock was up 552% year to date heading into Monday’s session — the best performance of any S&P 500 member by a wide margin.

Then came Tuesday.

SNDK dropped roughly 8% in early trading on May 12, touching a session low of $1,402.27. The trigger was a proposal from South Korea’s presidential chief of staff, Kim Yong-beom, who posted on Facebook that South Korea should levy a special tax on AI companies to fund a “national dividend.”

The post is not official policy. It has already drawn domestic criticism, with opponents calling the idea “dangerous and irresponsible.” But in a market where SNDK trades at sky-high valuations after a 552% run, the news was enough to spark profit-taking.

The wider storage sector got caught in the same wave. Micron and Western Digital each fell over 3%, while Seagate dropped more than 1%. The S&P 500 fell 0.87%, the Dow shed 0.56%, and the Nasdaq declined 1.51%.

What’s Driving the Business

The selloff didn’t change the underlying story. SanDisk’s datacenter revenues surged 233% sequentially in Q3 fiscal 2026 as hyperscalers and enterprise clients ramped up AI workloads using high-performance enterprise SSDs.

Management has framed NAND flash as a critical piece of AI infrastructure. Larger AI models, KV cache requirements, and retrieval-augmented generation workloads all demand massive, fast storage.

SanDisk extended its joint venture with Kioxia through December 2034 and committed roughly $1 billion to Nanya to lock in long-term DRAM supply. The company has signed five multi-year New Business Model agreements backed by financial guarantees exceeding $11 billion, with more than one-third of fiscal 2027 output already under long-term commitment.

For Q4 fiscal 2026, management guided for non-GAAP revenue of $7.75 billion to $8.25 billion, with gross margins of 79% to 81% and earnings of $30.00 to $33.00 per share. The Zacks consensus sits at $32.40 per share, up 76% over the past 30 days. That compares to earnings of 29 cents per share in the same quarter a year ago.

Reasons for Caution

Not everything points up. A company director sold 579 SNDK shares on May 12 for $870,300, or $1,503.11 per share. Short interest has climbed steadily as the stock has risen through 2026.

Several major Wall Street firms — including RBC, Barclays, and Wells Fargo — have not issued buy ratings on the stock despite its historic run.

SNDK trades at a forward price-to-sales of 5.97x, above the industry average of 3.96x and above Micron’s 5.73x. Western Digital trades at 10.63x and Seagate at 12.37x.

The company ended Q3 with $3.74 billion in cash, no remaining debt, and $3.04 billion in operating cash flow. Capital expenditure was just $240 million, or 4% of revenues, for the quarter. The $6 billion buyback authorization remains in place.

Despite Tuesday’s drop, SNDK was still outperforming the S&P 500 by 3.45% on the session.

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