Sandisk Drops 26% on Google Compression Fears, But Strong Fundamentals Signal Undervaluation With $671 Price Target
Summary
Sandisk drops 26% amid fears over Google's TurboQuant compression algorithm, but with Q2 data center sales surging 64% quarter-over-quarter, margins projected at 65-67%, and a $671 price target suggesting 17-18% undervaluation, analysts say the sell-off is overblown and the stock presents a strong buying opportunity.
Key Points
- Sandisk Corporation (SNDK) is experiencing a 26% sell-off driven by overblown fears surrounding Google's TurboQuant compression algorithm, but strong fundamentals remain intact with Q2 data center sales surging 64% quarter-over-quarter.
- Management is forecasting Q3 non-GAAP gross margins of 65-67%, supported by multi-year long-term agreements securing 60%+ margins that buffer the company against spot pricing volatility and reduce downside risk.
- SNDK appears undervalued by 17-18% following the correction, with a price target of $671 per share, and upcoming catalysts including Stargate product qualification and HBF technology rollout by 2027 offering significant growth potential.