Why SanDisk stock tumbled 10% today: are traders cashing out of AI rally?

SanDisk stock (NASDAQ: SNDK) fell approximately 6% on Wednesday, reversing some of the meteoric gains that have driven the storage giant 1,747% higher since the start of 2025.

The pullback marks a cautionary moment for momentum traders who have ridden the stock's explosive ascent on the back of blockbuster earnings and runaway AI datacenter demand.

While the underlying fundamentals, soaring AI-driven storage orders, margin expansion, and supply scarcity, remain intact, the scale and speed of recent rallies have left SanDisk vulnerable to tactical profit-taking.

SanDisk stock: Blockbuster earnings

Just five trading days ago, SanDisk dropped an earnings report that honestly felt a little unreal.

On January 30, the company posted fiscal second-quarter 2026 results showing adjusted earnings per share of $6.20, almost double Wall Street’s $3.49 estimate, while revenue came in at $3.03 billion versus expectations of $2.67 billion.

But the real jaw-dropper was management’s Q3 outlook. They guided for revenue between $4.4 and $4.8 billion (with a $4.6 billion midpoint) and adjusted EPS ranging from $12.00 to $14.00.

That blew straight past analyst forecasts of $2.77 billion in revenue and $4.37 per share.

The stock exploded, jumping 19% in premarket trading on the earnings beat, then tacking on another 15% over the next few days as analysts rushed to hike their price targets.

Citigroup, Goldman Sachs, and Jefferies all stuck with “Buy” ratings and slapped targets in the $700–$800 range, fueled by enthusiasm around SanDisk’s role in the AI infrastructure boom.

The company’s market cap ballooned past $110 billion, but the valuation story wasn’t nearly as pretty.

Because of massive net losses recorded in earlier periods, the stock still trades on negative earnings, making traditional P/E ratios close to useless.

Profit-Taking in an overextended rally

SanDisk's 6% decline on Wednesday fits a familiar pattern.

After gaining 44% in the first three trading days of 2026 alone, the stock had compressed an enormous amount of optimism into a very short window.

Technical traders often view such concentrated moves as ripe for profit-taking, especially when broader market sentiment turns choppy.​

The timing coincides with a pullback in other momentum names.

Memory chip peers like Micron and Western Digital also experienced intraday softness amid broader tech-sector rotation and volatility.

Structural story remains intact

Even with the recent pullback, CEO David Goeckeler made it clear that AI demand isn’t slowing down anytime soon.

“Customers prioritize supply over pricing,” he told the analyst.

SanDisk’s datacenter revenue jumped 64% quarter over quarter in Q2, and gross margins pushed past 50%, pointing to serious pricing power in a market where supply is still tight.

Management expects demand for flash memory to keep outpacing supply through 2026, and possibly well beyond that.

Wall Street is still largely bullish, too, with about 75% of covering analysts rating the stock a “Buy.”

That said, the massive January run packed a lot of gains into a very short window, which means any macro wobble or cautious earnings commentary could spark sharper pullbacks.

Investors will be watching closely for Q3 delivery updates, mid-February memory pricing reports, and broader signals around AI capex spending from cloud giants like AWS and Azure.