Key Takeaways
- Shares peaked at $1,600 on May 11, settling at $1,547.56 with a remarkable 552% gain for the year
- Datacenter business revenue exploded 233% quarter-over-quarter in fiscal Q3 2026, fueled by AI-driven SSD demand
- Shares tumbled approximately 8% on May 12, reaching an intraday bottom of $1,402.27, following South Korean AI taxation chatter
- An insider offloaded nearly $870,300 in shares while short positions have expanded alongside the rally
- Board approved $6 billion share repurchase program; company closed Q3 with $3.74 billion cash and debt-free balance sheet
SanDisk (SNDK) Stock Surges to $1,600 Before Tumbling on Proposed Tax Policy
Shares of SanDisk reached an annual peak of $1,600 during trading on May 11, ultimately finishing the session at $1,547.56. Leading into Monday, the memory storage giant had accumulated an extraordinary 552% return for 2026 — outpacing every other constituent in the S&P 500 index.
Tuesday painted a different picture.
SNDK shares plunged approximately 8% during early May 12 trading, bottoming out at $1,402.27 for the session. The catalyst emerged from South Korea, where Kim Yong-beom, the presidential chief of staff, floated the concept of imposing a specialized tax on AI companies via a Facebook statement. The proposed revenue would allegedly support a “national dividend” program.
The suggestion carries no official weight currently. Domestic critics have already condemned the concept as “dangerous and irresponsible.” Nevertheless, following a 552% vertical climb and elevated valuation metrics, traders seized the opportunity to lock in profits.
The broader storage industry felt the reverberations. Micron and Western Digital shares each declined more than 3%, with Seagate surrendering over 1%. Major indices reflected the risk-off sentiment: the S&P 500 retreated 0.87%, the Dow Jones shed 0.56%, and the Nasdaq stumbled 1.51%.
Fundamental Growth Drivers Remain Intact
Tuesday’s volatility hasn’t altered the core investment thesis. SanDisk’s datacenter segment delivered a staggering 233% sequential revenue increase during fiscal Q3 2026, propelled by hyperscale cloud providers and enterprise customers deploying high-capacity enterprise SSDs for AI infrastructure.
Executive leadership has positioned NAND flash memory as essential infrastructure for artificial intelligence advancement. Expanding AI models, key-value cache requirements, and retrieval-augmented generation applications all necessitate enormous quantities of rapid-access storage capacity.
The company strengthened its strategic positioning by extending its Kioxia joint venture partnership through December 2034 and allocating approximately $1 billion toward Nanya to secure long-term DRAM availability. SanDisk has finalized five multi-year New Business Model contracts supported by financial commitments exceeding $11 billion, with over one-third of fiscal 2027 production already locked under long-term agreements.
Looking toward Q4 fiscal 2026, executives projected non-GAAP revenue between $7.75 billion and $8.25 billion, anticipating gross margins spanning 79% to 81% alongside earnings of $30.00 to $33.00 per share. The Zacks analyst consensus stands at $32.40 per share, representing a 76% upward revision over the past month. This contrasts dramatically with the 29 cents per share earned during the comparable quarter last year.
Potential Warning Signals
Not every indicator flashes green. On May 12, a board director liquidated 579 SNDK shares totaling $870,300, translating to $1,503.11 per share. Short interest positioning has grown consistently throughout the 2026 rally.
Multiple prominent Wall Street institutions — including RBC, Barclays, and Wells Fargo — have refrained from issuing buy recommendations despite the stock’s unprecedented performance.
SNDK currently commands a forward price-to-sales multiple of 5.97x, elevated compared to the sector average of 3.96x and marginally above Micron’s 5.73x valuation. Western Digital carries a 10.63x multiple while Seagate trades at 12.37x.
The balance sheet closed Q3 with $3.74 billion in cash reserves, zero outstanding debt, and $3.04 billion in operating cash generation. Capital expenditure totaled merely $240 million, representing just 4% of quarterly revenues. The authorized $6 billion buyback program remains available for deployment.
Despite Tuesday’s decline, SNDK maintained a 3.45% outperformance versus the S&P 500 for that trading session.
