After a 12.63% Plunge: Why Wall Street Goes Against the Tide to Be Bullish on SanDisk?

On July 14, 2026, the US stock semiconductor sector saw a system-wide selloff.

The Dow Jones Industrial Index fell 138.37 points to close at 52,498.64 points, down 0.26%; the S&P 500 fell 60.05 points to 7,515.34 points, down 0.79%; and the Nasdaq Composite plunged 1.55%, closing at 25,873.18 points. The Philadelphia Semiconductor Index crashed 4.78% in a single day, to 12,347.78 points; all 30 component stocks closed in the red. Since the index set a record high in June, it has cumulatively dropped more than 15%.

The memory chip sector became the hardest hit. SanDisk (SNDK) plunged by $241.95, down 12.63%, closing at $1,673.97. Trading value reached $23.32B, the third-highest among individual US stocks by turnover that day. Micron Technology (MU) fell 4.32% to $937; SK Hynix ADR fell 9.32%; Seagate Technology slumped 5.46%; and Western Digital dropped 4.64%.

The crash happened despite SanDisk’s total gain for the year still exceeding 600%. As of July 13, SanDisk’s gain over the past 52 weeks had reached 3,531.96%. Such an enormous prior rally means that any pullback could trigger deeper market questioning about whether the “AI storage supercycle” has already ended.

However, in stark contrast to the brutal stock-price performance, multiple Wall Street institutions actually reiterated and even raised their price targets on the day of the plunge. What logic lies behind this “the more it drops, the more bullish” signal?

Triple-pressure resonance: why SanDisk became one of the worst-hit semiconductor stocks by drawdown

The July 14 selloff in memory chips was not triggered by a single factor, but by a resonance of three layers of pressure—macroeconomic, geopolitical, and industry-related.

First layer of pressure: the Fed’s clearest hawkish warning to date. In a public speech on Monday, a Federal Reserve governor, Christopher Waller, sent the most explicit hawkish signal so far. He said that if this week’s core inflation data again runs hot, “the Federal Open Market Committee will need to consider tightening monetary policy in the near term.” Waller specifically pointed out that tariffs, energy prices, and demand driven by AI infrastructure buildout have become important sources of inflation pressure. This statement directly triggered the market to reassess the rate outlook. After Waller’s remarks, the US 10-year Treasury yield jumped to 4.6156% in the short term; the US 2-year Treasury yield rose by about 7 basis points to 4.2773%. The CME FedWatch tool showed the market probability of a 25-basis-point rate hike in July surged from 26% a week earlier to 41%. For technology growth stocks valued on discounted future cash flows, each upward adjustment to interest-rate expectations means a direct compression of valuation multiples.

Second layer of pressure: Middle East geopolitical conflict escalated abruptly. On the same day as Waller’s speech, the US-Iran conflict escalated again. President Trump announced the restart of the blockade of Iranian ports, and US forces implemented a maritime blockade of all Iranian ports and Iranian coastal areas starting at 20:00 Greenwich Mean Time on July 14. International oil prices surged as a result; Brent crude briefly broke above $80 per barrel. The rapid rise in geopolitical risk weighed on tech stocks in two ways: higher oil prices directly pushed up inflation expectations, reinforcing the logic chain for further Fed hikes; and a systemic cooling in risk appetite drove capital out of high-beta semiconductor stocks and into defensive sectors such as energy—energy jumped 3.2% on the day against the trend. Exxon Mobil rose 4.05%, and Chevron climbed 3.29%.

Third layer of pressure: profit-taking after a massive prior rally. SanDisk’s gain of more than 600% year-to-date means any marginal negative information could trigger large-scale profit taking. After three consecutive trading days of cumulative gains of 18%, a sharp reversal in market sentiment further intensified the intensity of selling.

The crypto market faced similar pressure on the same day. Bitcoin fell below the $62,500 threshold; the 24-hour drop was about 2% to 2.5%, to $62,208.11. Ethereum also slid to $1,769.52. The total global crypto market cap fell back to about $2.23 trillion. The Fear and Greed Index dropped to 22, in the “fear” range. CoinGlass showed that in the past 24 hours, the total liquidation amount across the whole market reached $377 million, with nearly 90k investors liquidated. Solana fell 3.03%, Dogecoin fell 2.52%, and XRP fell 2.91%. The systemic suppression of risk assets by geopolitical risk created a cross-asset class resonance between the crypto market and the semiconductor sector.

The underlying logic behind Wall Street’s bullishness against the trend

In sharp contrast to the stock performance, multiple Wall Street institutions reiterated or even significantly raised their price targets for SanDisk on the day of the selloff.

Evercore ISI analyst Amit Daryanani raised SanDisk’s price target from $1,400 to $3,100, while maintaining a “outperform the market” rating. Daryanani believes investors have “underestimated the durability of SanDisk’s future earnings and free cash flow over the coming years,” and also underestimated the company’s ability to further raise prices if supply and demand imbalances persist through 2027. He even suggested SanDisk’s stock price could potentially reach as high as $4,000.

Citi analyst maintained a $2,500 target price and said, “We are most confident in memory storage-related stocks because their supply-demand fundamentals are very favorable, and the support behind it comes from durable AI data center demand—whether NAND flash memory or HDD storage will benefit.” Goldman Sachs analyst James Schneider raised SanDisk’s target price from $1,200 to $2,200 and reiterated a buy rating. Bernstein also raised its target price from $1,700 to $3,000.

Currently, 79% of analysts tracking SanDisk rate it as a buy. Since the company spun off from Western Digital Electronics in February 2025, this proportion has never been this high.

Wall Street’s optimism is built on three core logics.

Logic one: AI fundamentally changes the source structure of storage demand.

In the past, the storage industry relied heavily on consumer electronics endpoints such as PCs and smartphones. Today, the core growth engine has shifted to AI servers, data centers, and enterprise SSDs. AI model training and inference require massive data storage, and this trend is reshaping the industry’s entire growth curve.

According to institutional forecasts, AI NAND demand will rise from 205 exabytes in 2025 to 400 exabytes in 2026, and further increase to 609 exabytes in 2027. AI’s share of total NAND demand will also increase from 18% in 2025 to 32% in 2026 and 41% in 2027. The NAND price for enterprise SSDs rose 30% quarter-over-quarter in the third quarter of 2026, while consumer NAND recorded only a modest increase. TrendForce expects NAND flash contract prices in the third quarter of 2026 to rise 10% to 15% quarter-over-quarter. Although the upside is more contained than in previous quarters, the direction of price increases has not changed.

Logic two: structural constraints exist in the storage supply expansion.

The storage industry’s expansion cycle is long. Building fabs, NAND production lines, and high-end storage capacity typically takes years. More importantly, major storage vendors still prioritize capital expenditures on DRAM and HBM (high-bandwidth memory), rather than massively adding new NAND capacity. Meaningful incremental NAND supply may not be released until 2028.

According to Adata’s estimate, the DRAM shortage in 2026 is about 8%, and the NAND shortage is about 5%. Research institutions expect that supply shortages caused by resource misallocation will remain at 15% to 20% in 2026, and the shortage-driven, undersupply situation is likely to continue through the first half of 2027. Samsung said customers have started reserving 2027 capacity and believes the supply-demand gap will widen further in 2027.

When the pace of demand growth stays consistently higher than that of supply growth, prices are likely to remain elevated. This is the core basis for analysts to believe that storage companies’ profitability will keep improving.

Logic three: long-term supply agreements are changing the storage industry’s cycle pattern.

The core view from institutions such as Bernstein is that storage companies are shifting from the traditional cycle pattern—high demand driving capacity expansion, which then pushes prices down—toward a more deterministic model. Long-term supply agreements provide storage companies with greater earnings visibility, and periodic valuation fluctuations are expected to be smoothed. Evercore’s Daryanani explicitly noted that new long-term supply agreements bring a “structural shift” to SanDisk’s earnings visibility. If this assessment proves correct, the valuation logic for the storage industry would face a systematic reassessment—from strong-cycle stocks to cycle-growth stocks with growth characteristics.

Horizontal comparison of the memory chip sector

Driven by AI storage demand, each company benefits for slightly different reasons.

SanDisk (SNDK) has a core advantage in NAND flash and the enterprise storage market. As AI data centers’ demand for SSDs grows explosively, SanDisk’s positioning as an independent NAND supplier allows it to capture this structural tailwind to the fullest extent. Evercore raised its target price from $1,400 to $3,100, implying about 62% upside.

Micron Technology (MU) benefits from a more diverse set of factors—both the critical role of HBM (high-bandwidth memory) in AI compute clusters and a broad footprint across traditional DRAM and NAND. However, Micron also fell 4.32% on July 14.

As NVIDIA’s core HBM supplier, SK Hynix occupies the most critical position in the AI storage value chain. But its US ADR fell by more than 9% on July 14. Notably, SK Hynix’s US ADR had only been listed for the second trading day when it suffered a major drop.

From a valuation perspective, SanDisk’s current P/E (TTM) is about 54.98x, and its P/B is about 17.99x. The 52-week price range is $40.10 to $2,354.39—this range breadth itself highlights the stock’s high volatility.

Valuation bubble or the start of a cycle?

While betting on AI storage’s long-term logic, risks in the current market still must be acknowledged.

On the bullish side, the four major cloud providers—Amazon, Microsoft, Google, and Meta—are expected to have total capital expenditures of $725 billion in 2026, up 77% year over year from $410 billion in 2025. Microsoft alone is expected to spend $190 billion in capex in 2026. As long as cloud providers’ AI capex continues growing, the base of storage demand will not be shaken.

Risks also cannot be ignored. First, if AI investment returns fall short of expectations, cloud providers may slow the pace of capex. Second, storage prices are already at historical highs, and customers on the consumer side have reached their limit in terms of affordability. Third, SanDisk’s more-than-600% gain year-to-date has already priced in a large amount of forward-looking optimism; any earnings report or guidance that fails to meet expectations could trigger further valuation adjustments. Fourth, if expectations for Fed rate hikes strengthen further, highly valued growth stocks could face sustained valuation compression pressure.

Since the start of the year, the Philadelphia Semiconductor Index is still up about 75% year-to-date. This fact is especially critical when discussing the future outlook—after a big rally, a pullback could be a signal of trend reversal, or it could simply be a normal valuation correction after an overextended gain. SanDisk is expected to release its earnings report in early August, and soon after will hold an investor day event. These developments will become key checkpoints for validating the AI storage thesis.

Conclusion

On July 14, 2026, SanDisk’s 12.63% crash was the result of a three-way resonance: macro interest-rate pressure, geopolitical shocks, and a huge prior gain. This selloff reflects more the market’s short-term emotional venting as multiple negative factors stack up, rather than a trend-level reversal in the fundamentals of AI storage demand.

On the day of the selloff, multiple institutions including Citi, Evercore ISI, Goldman Sachs, and Bernstein raised or maintained their targets against the trend. Their core logic rests on three pillars: changes in the AI demand structure, constrained expansion on the supply side, and long-term agreements altering the industry’s cycle pattern. Whether these three logics hold will be validated in SanDisk’s August earnings report and the subsequent capex guidance from cloud providers.

For investors, the SanDisk case provides an important window for observing the logic behind AI infrastructure investment: in an environment where macro volatility and geopolitical risks intertwine, how to distinguish short-term noise from long-term trends is the key question to understanding how the current semiconductor sector is priced.

FAQ

Q1: What were the main reasons for SanDisk’s stock price crash on July 14?

SanDisk fell 12.63% that day, mainly due to the combined effect of three factors: Fed Governor Waller delivered a hawkish signal, raising the July rate-hike probability to 41%; the escalation of the US-Iran conflict sparked a surge in geopolitical risk premia, pulling capital out of tech stocks; and SanDisk’s year-to-date gain of more than 600% led to concentrated profit taking.

Q2: Why did Wall Street analysts raise their price targets after SanDisk’s crash instead of cutting them?

Evercore ISI raised its target price from $1,400 to $3,100, while Citi maintained $2,500. The core logic is that AI data center demand is changing the storage industry’s demand structure, and NAND capacity expansion is constrained by the direction of capital expenditures, with supply-demand imbalances expected to persist through 2027.

Q3: How big is AI’s specific impact on demand for memory chips?

AI NAND demand is expected to rise from 205 exabytes in 2025 to 400 exabytes in 2026, and further to 609 exabytes in 2027. AI’s share of total NAND demand will increase from 18% in 2025 to 41% in 2027. Price gains for enterprise SSDs are far higher than for consumer products.

Q4: What is the current supply-demand situation for memory chips?

In 2026, DRAM supply is about 7% below demand, and the NAND gap is about 5%. Samsung said customers have started reserving 2027 capacity. New incremental NAND supply may not be clearly released until 2028. The undersupply situation is expected to continue through the first half of 2027.

Q5: How did the crypto market perform on July 14, 2026?

The crypto market faced overall pressure on July 14: Bitcoin fell 3.04% to $62,208.11, and Ethereum fell 2.78% to $1,769.52. The global crypto total market cap is about $2.23 trillion, and the Fear and Greed Index dropped to 22 (fear). In the past 24 hours, total liquidations across the whole market were $377 million, with nearly 90k people liquidated.