Citron Research is betting against SanDisk stock. Should you?

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It’s been a great 12 months for SanDisk (SNDK) and its investors. SNDK stock is up more than 1,100% over the past 52 weeks on strong optimism that the company’s NAND flash storage products and other computer memory devices will continue to be in high demand. SanDisk was the best performer in the entire S&P 500 ($SPX) in 2025, and continues its strong performance with a 150% year-to-date (YTD) gain.

But a brief report from Citron Research threatens to let some air out of SanDisk’s sails. Citron said SanDisk is vulnerable because it believes demand for NAND flash memory drives is cyclical rather than structural, and the company is poised for a rebound.

“The market is pricing SanDisk as it is (Nvidia (NVDA)),” Citron said in a social media post. “There’s a problem: Nvidia has a moat. SanDisk is selling a product. We’ve seen this movie before in 2008, 2012, 2018. This time is no different. Memory is a cycle, and the cycle peaks.”

Citron also suggests that the Samsung is the best computer storage provider. “Samsung has a 30-year history of choosing market share over margins,” Citron said. “They’re waiting for a pure play like SanDisk to get comfortable at 50% gross margin, then flip the switch.”

Is Citron right that SanDisk is going too high, too fast?

SanDisk has an interesting history. The company was purchased by data storage company Western Digital (WDC) in 2016. But in 2023, Western Digital announced that it would spin off SanDisk once again into a new company that includes SanDisk and Western Digital’s flash products, solid state drives (SSDs), memory cards and USB drives.

It’s been a winning formula for SanDisk, which is based in Milpitas, California. With a dramatic increase in share price, the company now has a market capitalization of $83.4 billion.

Its products can be used in phones, laptops, cameras, and game systems. SanDisk also has a fast-growing edge computing segment, which provides storage for smart devices that generate data, such as cameras, drones and cars.

Even with these gains in stock price, however, SanDisk is surprisingly worthy. SNDK stock’s forward price-to-earnings (P/E) ratio of 16 times compares favorably with Samsung. So, you’re paying a small premium for Sandisk shares — but the stock’s performance over the past 12 months more than justifies the cost.

SanDisk continued its winning streak when it reported earnings for the second quarter of fiscal 2026. Revenue of $3.02 billion was up 61% from last year and up 31%, respectively. Net income was $803 million, up from $104 million in the same period last year, while EPS of $6.20 was higher than the $3.49 EPS that analysts had expected.

SanDisk got most of its money from its edge computing segment, which generated 21% more revenue sequentially to $1.67 billion. However, its data center segment grew even faster, up 64% sequentially to $440 million, while its consumer segment climbed 39% sequentially to $907 million.

“This quarter’s performance demonstrates our agility in investing in a superior product mix, accelerating enterprise SSD adoption, and strengthening market demand dynamics, all at a time when our products are recognized for their critical role in powering AI and the technology world,” said CEO David Gokeler.

Management issued Q3 guidance for revenue of $4.4 billion to $4.8 billion, and net income per share between $12 and $14. If these forecasts are met, SanDisk is looking for revenue growth of 45% to 59%.

Citron is definitely an outsider when it comes to SanDisk. Despite the short report, the 21 analysts covering SNDK stock are broadly bullish, with 14 rating it a “strong buy”, one a “neutral buy”, and six a “hold”.

The average price target of $700.94 suggests a potential profit of 17% from here. Meanwhile, the high price target of $1,000 indicates a possible 67% upside, and the low price target of $235 indicates a potential downside of 60%.

The big change in price targets isn’t a big surprise, considering how fast SNDK stock has risen in just 2026. However, SanDisk is certainly riding the wave of data center spending, as it increasingly offers storage systems to companies that are building AI computing capacity around the world.

Citron’s short report is worth noting, but for now, I’m still happy with SanDisk. This is shopping for me.

At the time of publication, Patrick Sanders held a position in: NVDA. All information and data in this article is for informational purposes only. This article was originally published on Barchart.com

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