SanDisk (SNDK) shares experienced a sharp reversal on May 12, dropping as much as 8% to an intraday low of $1,402.27 after hitting a 52-week high of $1,600 just a day earlier. The sell-off was triggered by a Facebook post from South Korea’s presidential chief of staff, Kim Yong-beom, proposing a special tax on AI companies to fund a “national dividend.” While not official policy, the suggestion spooked investors in a stock that had rallied 552% year-to-date, making it the top performer in the S&P 500.
The decline also reflected profit-taking after a director sold $870,300 worth of shares at $1,503.11 per share, and short interest had been rising as the stock climbed. Technical indicators further warned of an overheated market: the Relative Strength Index (RSI) had surged to 80, and the price had become significantly detached from its 100-day moving average of $705. Analysts at several Wall Street firms, including RBC, Barclays, and Wells Fargo, have not issued buy ratings despite the historic run.
Underlying business fundamentals remain robust. SanDisk’s datacenter revenues soared 233% sequentially in Q3 fiscal 2026, driven by enterprise SSD deployments for AI workloads. The company extended its NAND joint venture with Kioxia through 2034 and secured long-term DRAM supply from Nanya with a $1 billion commitment. Five multi-year “New Business Model” agreements exceed $11 billion in guarantees. For Q4, SanDisk guided revenue of $7.75–$8.25 billion, gross margins of 79–81%, and earnings of $30–$33 per share—a massive leap from 29 cents a year earlier. The company holds $3.74 billion in cash, zero debt, and a $6 billion buyback authorization.
Despite Tuesday’s slide, SNDK still outperformed the S&P 500 by 3.45% on the session. The broader memory-chip sector felt the chill, with Micron and Western Digital falling over 3% and Seagate more than 1%. The sell-off highlights the sensitivity of high-flying AI plays to regulatory speculation, even if the local opposition quickly labeled the proposal “dangerous and irresponsible.”
