SanDisk Just Went Vertical -- Is the Stock Now Too Hot to Handle?
SanDisk Just Went Vertical -- Is the Stock Now Too Hot to Handle?
Keith Speights, The Motley FoolTue, May 12, 2026 at 9:02 AM UTC
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Key Points -
SanDisk's stock has skyrocketed, driven by tremendous demand for its NAND memory.
However, famous investor Michael Burry believes that investors should sell "any stocks going parabolic."
The prudent approach with SanDisk is to ignore its stock chart and focus on its business and industry dynamics.
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2026 has been a very, very good year for SanDisk (NASDAQ: SNDK). The memory stock has delivered the best year-to-date performance among S&P 500 (SNPINDEX: ^GSPC) members -- by far -- with a gain of more than 550%. SanDisk has delivered a staggering 43x return since being spun off from Western Digital (NASDAQ: WDC) in February 2025.
A quick look at SanDisk's stock chart confirms that it has gone vertical in recent weeks. But is the high-flying stock now too hot to handle?
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Why SanDisk's stock has gone vertical
There are several positive reasons behind SanDisk's tremendous gains. Most importantly, the company is seeing explosive demand for its NAND memory from data centers hosting artificial intelligence (AI) applications.
SanDisk CEO David Goeckeler explained in the company's quarterly earnings call on April 30, 2026, "As AI models scale from billions to trillions of parameters, and deployments advance from simple inference to deep reasoning in increasingly autonomous agentic systems, NAND has become a critical component of the underlying infrastructure." He added that NAND flash memory "is emerging as the only economically viable solution to deliver the capacity, performance, and efficiency required to keep models accessible for real-time inference at scale."
The numbers appear to back up Goeckeler's upbeat take. SanDisk's third-quarter revenue soared 251% year over year and 97% quarter over quarter to $5.95 billion. The company's earnings skyrocketed 287% year over year and 350% sequentially.
SanDisk's momentum has also attracted significant attention from financial media. Its rapid rise has created a self-reinforcing cycle, as retail investors have jumped aboard the bandwagon, driving the company's share price higher.
A finger pointing to a lighted line chart with an arrow sloping upward.
Image source: Getty Images.
Buyer beware?
Investor Michael Burry, made famous by the movie The Big Short about the 2008 subprime mortgage crisis, wrote on Substack last weekend, "For any stocks going parabolic, reduce positions almost entirely." Is his view applicable to SanDisk? Possibly.
The story usually takes a turn for the worse with stocks that go vertical. For one thing, many investors can be tempted to take profits on their tremendous gains. When enough investors sell, the earlier momentum can quickly evaporate.
Bets appear to be mounting that this scenario is on the way for SanDisk. The amount of money shorting the stock has increased dramatically as the stock has risen this year.
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Before its acquisition by Western Digital in 2016, SanDisk was as cyclical a cyclical stock as you'd find. Investors could begin to worry about how long the current positive cycle will last. Any signs of a slowdown in demand for SanDisk's NAND would likely cause its share prices to plunge.
The prudent approach for investors
Perhaps SanDisk's stock isn't too hot to handle, but it is at a point where investors should be especially cautious. Investor sentiment for memory stocks is arguably better than ever. However, sentiment can rapidly change. SanDisk has delivered returns so impressive that any hiccup could cause many investors to bail out.
That said, just because SanDisk's stock has gone vertical doesn't mean you should sell or avoid the stock altogether. We could be seeing SanDisk transition from a cyclical stock to a long-term AI infrastructure play. The company's underlying business doesn't appear to have any glaring yellow flags. Despite the sizzling gains, the stock's valuation isn't all that scary, with shares trading at 24 times forward earnings.
What's the prudent approach for investors with SanDisk? First, ignore its admittedly impressive stock chart. Past performance isn't nearly as important as the potential going forward. Second, stay focused on SanDisk's business and the broader industry dynamics. Third (and this is just my opinion), waiting for a pullback of at least 10% before buying the stock is a pragmatic move. Even if everything looks great for SanDisk, the stock will likely retreat after soaring to astronomical levels.
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Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Western Digital. The Motley Fool has a disclosure policy.
Source: “AOL Money”
