Sandisk (SNDK) After a 488% 2026 Rally and 40% Pullback: Is the Memory Cycle Still Investable?
Sandisk (SNDK) is up 488% in 2026 yet sits 40% below its June peak. We weigh soaring EPS, 83-85% margins and supply deals against NAND memory-cycle risk.
Few stocks have had a year like Sandisk (NASDAQ: SNDK). The NAND flash maker closed near $1,395 on October 15, which still leaves it up roughly 488% year-to-date from its end-2025 close of $237. Yet that same price is about 40% below the June 25 peak of $2,335, and it came at the end of six straight down days that wiped out roughly 18% of the stock's value.
Both facts are true at once, and that is the whole debate. Is this a pause in a business that has fundamentally changed, or the early stage of the mean reversion that memory stocks are famous for? This article walks through the earnings, the margins, the valuation and the contracts to find out.
Key numbers
- Recent close: about $1,395 (October 15, 2026)
- 2026 performance: up about 488% from $237 at the end of 2025
- Distance from peak: about 40% below the $2,335 high set on June 25
- Latest slide: six consecutive down days, roughly 18% lost
- Non-GAAP EPS by quarter: $6.20 (fiscal Q2 2026), $23.41 (Q3), $39.25 (Q4, ended July 3)
- Fiscal Q1 2027 guidance: $44 to $46 non-GAAP EPS
- Adjusted gross margin: 84.6% last quarter, 83% to 85% guided
- Valuation: about 19x fiscal 2026 GAAP EPS of $73.76
- Supply agreements: eight customers, backed by $16.5 billion in financial guarantees
Where the stock stands after the pullback
The arithmetic shows how extreme the move has been. A 488% gain means the stock is worth almost six times what it was on the last trading day of 2025 ($237 × 5.88 ≈ $1,395). At the same time, $1,395 is only about 60% of the June high, so anyone who bought near the top is sitting on a loss of roughly 40%.
The most recent leg down was fast. Six sessions in a row of declines took away about 18% of the company's market value, a reminder that a stock with this kind of momentum can lose ground just as quickly as it gained it.
Earnings trajectory: a sixfold jump in two quarters
The rally was not built on hope alone. Sandisk's non-GAAP earnings per share went from $6.20 in fiscal Q2 2026 to $23.41 in Q3 and then to $39.25 in Q4, which ended July 3. That is more than a sixfold increase in two quarters.
Management expects the momentum to continue. Guidance for fiscal Q1 2027, the quarter that ended in early October, calls for non-GAAP EPS of $44 to $46. That implies mid-teens sequential growth on top of an already very large base.
Pricing is doing most of the work. About two-thirds of recent revenue growth came from higher average selling prices, while recovering volumes also support the outlook. That mix matters: price-driven growth is very profitable on the way up, but it is also the part of the story most exposed to a turn in the NAND flash cycle.
Margins near the top of the range
Adjusted gross margin is expected to stay between 83% and 85%, essentially flat with the prior quarter's 84.6%. For a company that makes physical memory products, margins at that level signal that the market is extremely tight and that Sandisk has strong pricing power right now.
The question is not whether these margins are impressive. They clearly are. The question is how much of today's share price assumes they will last.
Valuation: cheap on paper, cyclical in practice
At about $1,395, Sandisk trades at roughly 19 times its fiscal 2026 GAAP EPS of $73.76 (19 × $73.76 ≈ $1,401). Measured against the current earnings run rate, that multiple does not look demanding.
Memory, however, is one of the most cyclical industries in technology. Supply and demand swing hard, and prices follow. That creates a well-known trap: memory stocks often look cheapest exactly when profits are at their peak, because the "E" in the P/E ratio is about to shrink. A low multiple on peak earnings is not the same as a low multiple on normal earnings.
Long-term supply agreements: a partial floor
One genuinely new element this cycle is contract coverage. Sandisk has signed new multi-year supply agreements with eight customers that cover:
- approximately half of expected fiscal 2027 volume, and
- approximately two-thirds of fiscal 2028 volume,
at floor prices, backed by $16.5 billion in financial guarantees.
That provides real downside protection for the contracted portion of output. The other side of the coin is that the remaining volume is still sold into a market exposed to spot-price swings. If NAND pricing weakens, the uncontracted half of fiscal 2027 output is where the pressure will show up first.
Is the memory cycle still investable?
The bull case is straightforward. The business is clearly stronger than it was the last time the stock traded near today's price, in early May. Earnings have multiplied, margins are exceptional, and a large share of the next two years of volume is under contract at floor prices.
The bear case is about what the price already assumes. Most of the 488% gain happened while earnings were compounding at an extraordinary pace. Holding today's profit levels over the long term requires the unprotected half of output to keep its pricing power. That is a demanding assumption for a company whose adjusted EPS was under $3 just one fiscal year earlier.
Putting it together:
- Gradual, selective buying on further weakness can make sense for investors who understand how memory cycles work and can tolerate large swings.
- Taking a large, full position in one go carries an elevated risk of mean reversion if NAND prices cool.
Sandisk is a much better business than it was a year ago. Whether it is a better stock at $1,395 depends on how long you believe this phase of the cycle can last.