SanDisk surges 10% to $2,147 as memory rally defies overbought warnings

SanDisk's 800% year-to-date surge drew warnings from a prominent chart technician that the memory trade has become the most extended in history.

SanDisk Corp. shares surged 10% to $2,147 on Thursday, pushing its year-to-date gain past 800% and its market capitalization to $317.9 billion, as a sector-wide rally in memory stocks defied technical warnings of an imminent pullback.

"This is the most overbought stock I have ever seen in my career," Carter Worth, founder of Worth Charting, said on CNBC's Closing Bell this week. "The memory complex has gone too far, too fast."

The rally swept across the sector. Western Digital Corp. gained 10%, Micron Technology Inc. rose 6.6%, and Seagate Technology Holdings Plc added more than 4%. The Roundhill Memory ETF climbed 6%, tracking sharp gains in SK Hynix and Samsung Electronics in Seoul. SanDisk has surged 4,405% over the past 12 months, with its 150-day simple moving average at $748.25 — meaning the stock trades nearly three times above its long-term trend line.

The question facing investors is whether the fundamental case — a structural NAND upcycle driven by AI data center demand — can justify valuations that have left even bullish analysts behind. Wall Street's mean price target on SanDisk stands at $1,751.32, roughly 18% below the current quote, while the stock trades at a trailing price-to-earnings multiple of 68.

The fundamental backdrop remains powerful. SanDisk reported blowout fiscal third-quarter results with non-GAAP earnings per share of $23.41, crushing the $14.34 consensus, on revenue of $5.95 billion against $4.7 billion expected. Gross margin hit 78.4%. Chief Executive Officer David Goeckeler called it "a fundamental inflection point," citing multi-year customer agreements and a zero-debt balance sheet. Fourth-quarter guidance calls for non-GAAP EPS of $30 to $33.

Apple Inc. Chief Executive Officer Tim Cook added fuel to the bull case this week, telling the Wall Street Journal that soaring memory and storage chip costs would force price increases across Apple's product lineup. "The situation has become unsustainable," Cook said. Apple sources DRAM from Samsung, SK Hynix, and Micron, and NAND flash from Kioxia, Western Digital, SanDisk, and Micron.

Deutsche Bank and Citigroup raised their price targets on Micron earlier this week, citing elevated DRAM demand in the years ahead.

The Technical Warning

Worth constructed an equal-weight basket of the six largest memory stocks — totaling $4.4 trillion in market capitalization, roughly the size of Apple Inc. — to illustrate the scale of the move. The basket surged 1,375% from its 2023 lows after two drawdowns of 39% and 37%. He singled out Micron as the canary, pointing to an intraday exhaustion reversal where the stock printed a new high and closed weak — a pattern he called "you've lost your grip on the bar."

His projected reversion: a 15% to 20% pullback across the memory complex.

Insider activity at SanDisk has tilted toward sales. The chief legal officer sold 600 shares at $1,736 on June 3, and the executive vice president and chief technology officer sold 2,000 shares at roughly $1,755 to $1,758 on June 1.

What Investors Should Watch

The dispersion between memory and the rest of semiconductors is widening. Nvidia Corp., the original AI infrastructure proxy, has gained 43.5% over the past 12 months with its relative strength index at a neutral 47.5. Western Digital has rallied 1,090% over the same period. If the buying pauses, Worth's analysis suggests the reversion could be sharp — not because the memory cycle is broken, but because the price has run ahead of even the most optimistic fundamental forecasts.

About 70% of more than 3,000 users in a Stocktwits poll said they remain bullish on the memory sector. But with SanDisk trading above every Wall Street analyst's price target and insider selling accelerating, the risk-reward calculus has shifted.

This article is for informational purposes only and does not constitute investment advice.