Sandisk Corporation witnessed a sharp decline of 11.4% on Friday, closing at $1,559.32 after a broad-based selloff in semiconductor stocks erased approximately $1.3 trillion in market value from U.S. chipmakers. The stock, which had recently reached an all-time high of $1,861, reversed sharply during the session, touching an intraday low of $1,513.07. The company's market capitalization settled around $244.8 billion, according to market data.
The downturn was led by the PHLX Semiconductor Index (SOX), which tumbled 10.3%—its steepest single-day loss since March 2020, when the COVID-19 pandemic triggered a market rout. The selloff extended beyond Sandisk, with other major memory and AI-chip names also suffering. Micron Technology dropped 13.3% to $864.01, Seagate Technology lost 8.5%, and Western Digital fell over 11%, according to Investor's Business Daily.
Investor sentiment soured as concerns over valuation and supply-cycle risks resurfaced, despite ongoing tightness in AI-related storage demand. Sandisk, a key player in NAND flash memory—a critical component for AI systems handling large files and corporate data—had been a high-flying trade on AI storage demand. However, the sector's recent rally came under pressure after Broadcom's AI-chip update earlier in the week disappointed some market participants, weighing on the broader semiconductor space.
"Blindly buying the dip had been winning you money, but that ended today," said Dennis Dick, a prop trader at Triple D Trading, in comments to Reuters. Ohsung Kwon, chief equity strategist at Wells Fargo, noted that chips had been "way overbought," but added that he does not view the move as the end of the chip bull run.
Sandisk's recent earnings report had shown strong fundamentals. The company posted fiscal third-quarter revenue of $5.95 billion on April 30, nearly doubling from the previous quarter, with GAAP net income of $3.62 billion and non-GAAP earnings of $23.41 per share. Data-center revenue surged 233% quarter-over-quarter, driven by higher-value customers and increased pricing. CEO David Goeckeler described the quarter as a "fundamental inflection point" in the company's earnings release, citing robust data-center demand and longer customer contracts with financial backing.
Key supply agreements have been a cornerstone of Sandisk's strategy. Reuters reported that the company secured five major supply deals, three of which total $42 billion. Additionally, Sandisk announced a $6 billion share buyback program. "The bane of this industry has been the boom-bust cycle," Goeckeler told Reuters. "We want to get out of that." The company's fiscal fourth-quarter revenue forecast of $7.75 billion to $8.25 billion and adjusted profit of $30 to $33 per share both exceeded Wall Street expectations, according to Reuters.
However, some analysts remain cautious. Michael Ashley Schulman, a partner at Cerity Partners, said that Sandisk and Western Digital's outlooks were "failing to provide the necessary 'wow factor'" after storage stocks had soared. Morgan Stanley analysts noted that tight supply continues to support the sector, but warned that there is "no quick fix" for the memory shortage tied to AI demand, with the crunch potentially lasting another two to three years.
Despite the positive fundamentals, the risks are becoming harder to ignore. If AI storage orders slow, if buyers push back on higher NAND prices, or if long-term contracts fail to mitigate historical memory cycle volatility, Sandisk's earnings may prove less stable than bulls anticipated. The same supply squeeze that has driven prices higher could reverse quickly if supply rebounds or demand eases.
Sandisk is scheduled to present at the Mizuho Technology Conference on June 9, with management webcasts available on the company's investor relations site. Traders will be looking for confirmation on whether Friday's decline was merely a valuation reset or a signal of deeper trouble in the AI memory trade.
