SanDisk (SNDK) Stock Plunges 12% While Bernstein Raises Target to $3,000

TLDR

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Mark Newman from Bernstein increased his SanDisk price target from $1,700 to $3,000, establishing the most aggressive forecast on Wall Street.
This bullish stance follows a roughly 12% decline in SNDK shares over two sessions amid concerns about AI infrastructure spending linked to OpenAI financing developments.
Newman highlights that modern long-term supply contracts provide significantly better downside protection compared to legacy industry agreements.
The firm adjusted its fiscal 2027 and 2028 EPS projections upward to $243 and $272 respectively in the base scenario.
While SNDK maintains a Strong Buy consensus among analysts, the average price target remains under the current trading price.

SanDisk stock (SNDK) experienced significant volatility recently. The shares tumbled approximately 12% across two consecutive trading days following news that OpenAI is exploring additional financing alternatives for upcoming AI infrastructure initiatives. This development triggered widespread concern among semiconductor investors, with SanDisk swept up in the broader sector retreat.

Sandisk Corporation, SNDK

Yet Bernstein’s Mark Newman remains unfazed by the selloff. He recently elevated his SanDisk price objective from $1,700 to $3,000, positioning himself as one of the most optimistic voices on Wall Street. His Outperform rating continues unchanged.

According to TipRanks metrics, Newman places in the top 1% of financial analysts. His perspective: the market continues to underappreciate the fundamental transformation within the memory sector.

Newman’s Case for Further Gains

The foundation of Newman’s thesis rests on evolving long-term supply contracts. Historical agreements typically favored buyers during price declines. Contemporary deals present a markedly different landscape.

These updated contracts feature fixed or range-bound pricing mechanisms, substantial upfront financial obligations, and durations spanning three to five years. Newman contends this framework substantially reduces downside exposure, though it doesn’t eliminate the memory industry’s inherent cyclical characteristics entirely.

He also challenged a prevalent Wall Street misconception regarding these agreements. Many analysts view the upfront financial commitments as static safeguards. Newman maintains their protective capacity actually increases over time, as remaining delivery obligations decrease while the initial commitment remains constant.

“We believe this is not understood by the Street,” he explained, emphasizing the structure provides enhanced protection in later stages, “when it is more likely to be needed.”

Drawing from SanDisk’s current agreements, Newman calculates the price floor near $0.29 per gigabyte. This figure closely aligns with his present average selling price projection for the business.

He included an important qualifier. These extended contracts “do not completely remove risk of future downcycles,” though they “do significantly alleviate downside risk.” Newman calculates that even during a price crash exceeding historical industry downturns, approximately 60% of anticipated volumes would remain safeguarded under long-term agreement provisions.

Financial Projections Supporting the Outlook

Newman revised his earnings estimates higher to align with his increasingly optimistic perspective. His current base-case scenario projects fiscal 2027 earnings per share at $243 and fiscal 2028 at $272.

His bull-case projections extend considerably beyond these figures, reaching $350 for fiscal 2027 and $400 for fiscal 2028. These numbers embody his conviction that present pricing conditions will persist longer than consensus expectations.

Newman contends the market hasn’t adequately incorporated these structural shifts into SanDisk’s valuation. “Lower volatility and higher sustainability of earnings are worth a higher PE,” he stated, noting that diminished downside risk to earnings “is not being factored into current multiples.”

The broader analyst community shares the bullish sentiment, though with less conviction. SNDK carries a Strong Buy consensus rating composed of 14 Buy recommendations and 2 Hold ratings.

The consensus 12-month price target among analysts stands at $1,954.38. This figure trails the current share price by roughly 5%, indicating many analysts haven’t fully adjusted to SanDisk’s extraordinary performance this year.

SanDisk shares have surged 764% year to date. Newman’s $3,000 price objective now represents one of the most ambitious targets on Wall Street.

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