Sandisk (SNDK +0.00%) has taken investors on a ride in 2026. It's still the best-performing component of the S&P 500 (^GSPC -0.25%) this year, but lost a significant amount of value since its highs in late June.
Sandisk is down around 35% since then, but is this a screaming bargain that investors should scoop up in September, or is this stock better left alone?
Let's take a look at some trends and see if Sandisk's sell-off occurred for a good reason or if now is the time to strike.
Image source: The Motley Fool
Sandisk stock appears incredibly cheap
Sandisk makes NAND memory, which is often used for long-term information storage. There is currently a huge memory chip shortage, mainly because the AI data center buildout has consumed all available capacity. There isn't much that separates one memory chip producer from another, so the entire market is fairly commoditized. Commoditized products follow economic theory very closely, and this dictates that as supply is low and demand is high, prices soar.
That's exactly what Sandisk has experienced and why its stock skyrocketed.
None of Sandisk's input costs have changed, but what it can sell its products for has dramatically increased. This is showing up in its financials, as its revenue rose 51% quarter over quarter. Most companies would be thrilled to grow at a 51% rate in a year over year comparison. Sandisk grew more than 50% in just three months. Of that gain, it informed investors that a third of the growth came from increased production while two-thirds came from higher prices. Year over year growth was a jaw-dropping 372% increase, and Sandisk's future is still bright.
NASDAQ: SNDK
Key Data Points
The only way this shortage will alleviate is through increased production capacity or decreased demand. Based on language from the AI hyperscalers, demand won't be decreasing anytime soon. It takes years to build new production facilities, and while the memory chip industry is working at building new capacity, it may be a while before that's available. Furthermore, there's no saying that new capacity won't be immediately used up by hyperscalers, prolonging the shortage.
The reality is that the market conditions that drove Sandisk's stock higher are going to stick around, and that helps justify purchasing the stock today.
As another boost, the stock is dirt cheap.
SNDK PE Ratio (Forward) data by YCharts
At just seven times forward earnings, the market is skeptical about the longevity of the memory chip market conditions. If the shortage persists over the next year and a half and beyond, Sandisk stock is a genius buy right now and will make investors a nice return on investment over the next year.
