Buy or Sell Sandisk Stock Around $665?
SanDisk (NASDAQ: SNDK) stock is trending near-record high around ~$665, fueled by blockbuster earnings and a massive AI-driven demand surge for flash memory. The catalyst? In its latest quarter, SanDisk blew past expectations — reporting adjusted EPS of $6.20 on $3.03 billion in revenue, comfortably above analyst estimates and driven by strong data-center and AI-related demand. Management then guided Q3 revenue around $4.4–$4.8 billion with EPS well ahead of consensus, reinforcing confidence in growth prospects.
But does this booming performance change the fundamental picture? Not entirely. Yes, trailing growth is extraordinary right now, but much of it reflects a rebound and re-rating post-spin-off rather than long-term baseline expansion.
Revenue growth? Through the roof — but lumpy. On a year-over-year basis, SanDisk’s most recent revenue surge was driven by ultra-strong flash memory pricing and AI demand. However, when looking over a longer earnings cycle, profitability and consistent top-line momentum remain far from smooth — SanDisk posted a net loss for the full fiscal 2025 year despite higher revenue, and margins have swung due to transitional costs and impairments.
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What about profitability? Aren’t margins strong?
SanDisk’s gross margin is in the ~28–30% range; however, its operating and net profit margins have been negative, reflecting significant operating losses last year tied to goodwill impairments and transition costs from the Western Digital spin-off. So while the quarter looked strong on adjusted earnings, the underlying profit picture is still recovering and volatile.
So it’s financially sound?
Sort of — but complex. SanDisk carries ~$1.9-$2.0 billion in debt and had $1.48 billion in cash at mid-2025, with shareholders’ equity solid, showing a strong balance sheet post-spin-off.
But the company is emerging from a period of large non-cash charges and has exhibited negative profitability metrics over the full year, indicating that current earnings strength is still working its way into full-year results.
Then what’s the problem?
Two key issues temper the bullish headline:
Profitability isn’t stable yet. SanDisk’s impressive adjusted EPS in the latest quarter contrasts with full-year losses (operating and net) and volatile earnings performance. That inconsistency elevates risk, especially if memory prices or data-center demand soften.
Valuation may be stretched. With a market capitalization near $98 billion and massive stock appreciation since its 2025 spin-off , investors are pricing enormous future growth into today’s price. Traditional multiples are hard to apply due to negative earnings, but price-to-sales is high relative to peers.
What does the valuation say?
SanDisk’s trailing P/E is not meaningful (due to negative net income), but price-to-sales and similar ratios imply investors are paying up for future performance. That’s fine in a growth story — if the growth persists. Right now, the market is betting heavily on AI demand and persistent supply constraints in NAND flash.
Bottom line?
SanDisk’s stock is priced for powerful growth ahead, reflecting extraordinary revenue momentum and booming AI-related demand for storage hardware. But the fundamental base still has weaknesses: profit margins that have only recently improved, full-year losses in the recent past, and a valuation that assumes future scaling.
If you believe AI demand continues unabated and SanDisk can convert booming revenue into stable profits, the bull case remains strong. But if you prefer companies with consistent historical profitability and steadier margins, you may consider risk and valuation carefully before diving in.
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