SanDisk plunges 14% in a single day, entering a technical bear market. What's the outlook for memory chips?

On July 2, 2026, SanDisk (SNDK.O) closed at $1,745.000, down $287.220 on the day, a decline of 14.13%. Trading volume was 17.34 million shares, with a turnover rate of 11.7%. During the session, it hit a low of $1,693, and the intraday range was as high as 17.69%. After hours, the stock rebounded slightly to $1,762.07.

This is not an isolated event. In the prior trading session, SanDisk had already dropped 10.6%, bringing the cumulative two-day decline to 23.25%, officially entering a technical bear market. Over the same period, Micron Technology fell 15.48% over two days, Seagate Technology fell 15.01%, and Western Digital fell 15.61%. The four storage leaders together evaporated about $340 billion in market value over two trading sessions.

SanDisk Plunged 14% in a Single Day—What Exactly Triggered It?

This broad selloff in the storage chip sector was most directly sparked by Meta. On July 1, Bloomberg reported that Meta is setting up an enterprise unit to generate revenue by selling excess computing capacity to external customers. After the news broke, Meta’s stock surged nearly 10%, but chip stocks collapsed across the board.

The logic chain in the market’s interpretation is clear: if Meta has surplus computing power that it can rent out externally, it implies that the AI capital expenditures by tech giants may have already exceeded actual demand—computing power is no longer “absolutely scarce.” Rich Privorotsky, head of Delta One at Goldman Sachs, summed it up very precisely: “The core market premise is that computing resources are scarce. If scarcity persists, prices should remain firm, thereby supporting sustained capital expenditures. If supply increases while rental prices continue to fall, this will directly challenge the claim of a shortage of computing resources.”

Soon after, the market also circulated a report that Anthropic is discussing cooperation with Samsung Electronics on developing its own AI chips. With these two messages combined, they jointly touch the most sensitive issue in the AI industry chain: after two years of rapid expansion in AI capital expenditures, is the cycle shifting from “scaling up” to “optimizing efficiency”?

AI Capital Expenditure Logic Faces Reassessment—Why Are Storage Chips Hit First?

Over the past two years, the core narrative driving the AI hardware sector has been very clear: the bigger the model, the more inference, the more computing power needed, and therefore tech giants must raise capital expenditures. The entire AI hardware chain—everything from GPUs to storage, from foundry to equipment—has been embedded in that same narrative logic.

But placing Meta’s and Anthropic’s two pieces of news together changes the narrative. Meta wants to sell temporarily underutilized AI computing power; the key is to improve the return on its investment of hundreds of billions of dollars in AI infrastructure. Anthropic is pushing ahead with its own ASICs, primarily to lower long-term costs. Different paths, but the same goal: making AI spending more sustainable.

Storage chips have become the worst-hit area because they are extremely sensitive to the capital expenditure cycle. The growth in demand for AI servers and enterprise SSDs is built on the assumption that tech giants will continue expanding data centers. Once the market starts doubting whether “capital expenditures can keep accelerating,” the valuation premium of the storage sector faces the most direct compression. Over two trading sessions, the Philadelphia Semiconductor Index fell by more than 11%, and storage ETFs plunged by more than 10%.

Has SanDisk’s Year-to-Date Gain Been Too Large—Is Profit-Taking Unwind Really the Main Reason?

Beyond the impact from the news, a more straightforward reason is: “it had risen too much earlier.” In the first half of 2026, SanDisk’s largest year-to-date gain was close to 900%, with its stock performance far outpacing most semiconductor stocks over the same period. Micron gained more than 300% in the first half. When an asset rises to this extent, even a slight shift in sentiment can trigger an avalanche of profit-taking.

Industry research firm Intellectia noted that such parabolic price movements inevitably make the stock highly susceptible to changes in market sentiment. When a stock price reflects years of optimistic growth expectations, even a small crack in bullish sentiment can set off a major price correction.

From a trading-structure perspective, with a large number of profit-taking positions layered alongside leveraged capital, declines can easily turn into a stampede. SanDisk’s P/E ratio before the plunge was as high as 77x, and the lofty valuation itself magnified the market impact of any negative news.

Has SanDisk’s Fundamentals Deteriorated Substantially?

Based on the financial data that has been disclosed, SanDisk’s fundamentals have not shown obvious deterioration. In fiscal 2026 Q3, revenue reached $5.95 billion, up 97% quarter-over-quarter and 251% year-over-year; GAAP net profit was $3.615 billion. More importantly, data center revenue reached $1.467 billion, up 233% quarter-over-quarter and 645% year-over-year, indicating that demand for AI servers and enterprise SSDs is rapidly changing SanDisk’s revenue mix. The company’s guidance for Q4 is also strong, with expected revenue of $7.75 billion to $8.25 billion.

Western Digital (the former parent of SanDisk) reported Q3 revenue of $3.34 billion, up 45% year-over-year, and its Non-GAAP gross margin first exceeded 50%.

However, what the market trades is never only the current data—it is also expectations for the future. SanDisk is locking in prices and customer prepayments through new long-term supply agreements, trying to make profitability less dictated by the traditional storage cycle. But the market did not seem to buy it during the crash— even in the same week that Kioxia and SanDisk announced the start of production of their 10th-generation 3D flash memory products, the stock still fell sharply.

The Institutional View Is Widely Divergent—What Expectations Is the Market Pricing In?

Institutional forecasts for SanDisk’s target price are extremely split. Bernstein raised its target price from $1,700 to $3,000, and Jefferies also set a target of $3,000. Susquehanna’s target was $3,250, which is among the most optimistic expectations currently. Bank of America raised its target price from $2,100 to $2,500, believing that the NAND supply shortage may persist until mid-2027.

But Morgan Stanley, which is more cautious, set a target price of only $1,750—close to the latest share price. Among the 22 analysts, the target price range spans from $1,000 to $3,250, with an average target price of $1,864, only about 6.8% higher than the latest closing price.

Such a huge divergence itself shows that the market’s valuation of SanDisk has moved beyond a simple extrapolation of fundamental data, and has entered a multi-factor game involving the AI capital expenditure cycle, storage supply-demand dynamics, and industry competition.

How Can Gate Platform Users Participate in Storage Sector Market Moves?

For investors who are focused on the storage chip market, Gate has launched real US stock trading services, supporting trading in more than 10,000 US stock tickers. Users do not need to exchange currencies, make cross-border remittances, or open an additional brokerage account. They can directly use the USDT liquidity in their Gate account to buy real stocks listed on major US exchanges such as the New York Stock Exchange and Nasdaq with one click.

Core storage-sector names such as SanDisk (SNDK), Western Digital (WDC), and Micron Technology (MU) have all been listed on Gate as real US stock trading products, and users can directly participate in the price swings of the storage chip sector within the platform.

Summary

SanDisk plunged 14.13% to $1,743 last Friday. With a cumulative two-day decline of over 23%, it entered a technical bear market—a result of multiple factors converging: Meta’s computing power leasing triggered a re-examination of the AI capital expenditure logic; Anthropic’s self-developed chip news intensified the industry narrative shift; the near 900% year-to-date gain built up a large amount of profit-taking positions that subsequently unwound/cleared; and the high valuation amplified the impact of negative news.

From a fundamentals perspective, SanDisk’s revenue, profits, and guidance remain strong, and the NAND supply-demand landscape has not undergone a fundamental reversal. The enormous divergence in institutional target prices indicates that the market is in a phase of aggressive valuation repricing. A short-term rebound has already appeared, but confirmation of the trend still requires more signals.

The direction of the storage chip sector going forward essentially depends on the answer to one core question: is AI capital expenditure shifting from “expansion” to “efficiency optimization,” or is it merely a phased adjustment in cadence? The answer will determine whether SanDisk has fallen into a “golden pit” or whether it is entering a longer period of value reassessment.

FAQ

Q1: What is the main reason for SanDisk’s big drop this time?

The direct trigger was the news that Meta plans to lease out excess AI computing power, which led the market to question the “absolute scarcity of computing power” logic. Combined with rumors about Anthropic’s self-developed chips, profit-taking positions concentrated from the stock’s excessive year-to-date run, and sentiment fragility under a high valuation, multiple factors converged to cause SanDisk’s 14% single-day plunge.

Q2: Has SanDisk’s fundamentals turned bad?

Judging from the disclosed financial data, SanDisk’s fundamentals have not deteriorated. For fiscal 2026 Q3, revenue was $5.95 billion, up 251% year-over-year, and data center revenue grew 645% year-over-year. The company’s guidance for Q4 is also strong. This drop is more an adjustment in valuation and sentiment rather than a deterioration in fundamentals.

Q3: How should we look at the outlook for the storage sector?

The outlook depends on whether the AI capital expenditure logic undergoes a fundamental change. If tech giants are only making phased adjustments to the pace of capital expenditure, the underlying demand base for storage will remain solid. If “computing power oversupply” becomes an industry-wide consensus, the storage sector will face a longer period of valuation reshaping. On July 6, the sector has already seen an oversold rebound, but trend confirmation still needs observation.

Q4: Can I trade SanDisk stock on Gate?

Yes. Gate has launched real US stock trading services, supporting more than 10,000 US stock tickers, including core storage stocks such as SanDisk (SNDK), Western Digital (WDC), and Micron Technology (MU). Users can trade directly using USDT within the platform.