Key Takeaways
- Leopold Aschenbrenner’s Situational Awareness made Sandisk its biggest holding by June 30, and 10 other big funds took new or bigger positions in it, but the stock is down 54% since.
- Higher flash prices drove Sandisk’s surge in profits, and those price gains are slowing.
- Sandisk trades at 4.4x forward earnings, its lowest multiple since it listed, even though analysts expect its earnings to more than triple this fiscal year.
- At less than half its June 30 price, the funds’ bet looks worth following, and Sandisk’s late-January report is the next test of its long-term contracts.
Leopold Aschenbrenner’s Situational Awareness made Sandisk (SNDK) its biggest holding by June 30, and 10 other big funds joined it, according to their 13Fs for the quarter ended June 30, filed in August. That’s a crowd worth paying attention to, especially now that the stock is down 54% from its June 30 close.
Aschenbrenner’s biggest bet
Situational Awareness manages $20.17 billion. It more than doubled its stake in the quarter, to 2.50 million shares worth $5.67 billion on June 30. That was 28.1% of its 13F stocks and its No. 1 position.
It had company. Sands Capital, which manages $44.3 billion, opened a $348 million position. Zweig-DiMenna Associates added 31% to its stake, which made Sandisk its No. 1 holding at 6.7% of its 13F stocks. BIT Capital, a fund with $2.92 billion in US stocks, opened a position at the same weight. Six others opened or added to smaller stakes.
The 10th, RK Capital Management, held put options on 108,700 shares, $247 million notional and 13.4% of its 13F stocks. Those pay off if the stock falls.
A 13F shows only what a fund held on the quarter’s last day. So we don’t know what any of them paid, or whether they still own the stock.
TIKR tracks 25 analysts on Sandisk. How many say “Buy”?
See the full breakdown of Buy, Hold, and Sell ratings on Sandisk, along with Wall Street’s revenue and earnings estimates, all in one place. More than 500,000 investors use TIKR to research stocks like this one. See Sandisk’s Analyst Ratings
Prices are still rising, just slower
Sandisk’s business hasn’t fallen apart. In the quarter ended Oct. 2, revenue rose to $11.03 billion from $2.31 billion a year earlier, and its non-GAAP gross margin hit 85.1%, up from 29.9%. The stock sank after that beat anyway.
Higher flash prices did most of that work, and those gains are slowing. Management said price drove about 40% of the latest quarter’s growth over the one before, down from about two-thirds a quarter earlier. And Sandisk’s revenue beat the top of its own guidance by 24% in the quarter ended in April, then by 9%, then by just 2% in the quarter ended Oct. 2.
Kioxia, Sandisk’s partner in the joint venture that makes all its flash wafers, is seeing the same thing: it guided its December-quarter operating profit flat at ¥2 trillion as its own price gains slowed.
That’s a problem because flash is a brutal cycle. In fiscal 2023, Sandisk’s GAAP gross margin was 7.1%.
The market is pricing in a peak
Analysts haven’t cut their numbers. They expect normalized EPS to more than triple to $227.80 in fiscal 2027, then reach $287.26 in fiscal 2028:
Investors are paying far less for those earnings than they used to. Sandisk trades at 4.4x forward earnings, its lowest since it listed in February 2025. Over the last year, its average was 11x and its high was 32x:
A few analysts share the market’s worry. The three with fiscal 2030 estimates average $155.11 a share, 49% below the fiscal 2029 consensus of $305.34. Even that is a single-digit multiple of Wednesday’s $1,037.40 close.
Sandisk is counting on its multiyear contracts to get it through the cycle. Its remaining performance obligations were $88.9 billion on Oct. 2. They’re valued at floor prices, and management says those floors still earn about an 80% gross margin. But the oldest of those contracts was signed in January. And in August, the $16.5 billion of financial guarantees behind them covered less than a fifth of their minimum value.
Analysts’ average target is $2,024, 95% above Wednesday’s close, from 25 analysts. It climbed from $130 a year ago to a peak of $2,227 in July, and has slipped since:
I’d follow the funds here
The risk is simple: Sandisk’s contracts have never been through a drop in flash prices. If buyers push back when prices fall, earnings will fall with them.
Still, I think it’s time to buy. Sandisk has no debt. Over its last two quarters it spent $9.5 billion buying back its own stock, at an average of $1,583 a share, well above Wednesday’s close. And at 4.4x, the stock is priced for a bust that even Wall Street’s most cautious estimates don’t show. I’d buy in pieces rather than all at once, though, since Kioxia’s warning says Sandisk’s easiest price gains are behind it.
Sandisk reports again in late January. The March quarter is usually its weakest, and analysts expect $12.48 billion of revenue in it. If Sandisk’s guidance comes in near that and its contract backlog holds up against $88.9 billion, I’d feel a lot better about the buy. And the funds’ next 13Fs, due by Nov. 16, will show which of them still owned Sandisk on Sept. 30.
So what is Sandisk stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
