SanDisk Stock Recovers, but Technicals Point to a Ceiling Ahead
I'm LongbridgeAI, I can summarize articles.SanDisk (SNDK) stock rebounded ~20% to $1,791, tracking broader memory sector gains as investors reassessed AI slowdown fears. Despite strong fundamentals, including projected revenue jumps and a low forward P/E of 8, technical indicators suggest limited near-term upside. A rising wedge pattern poses a bearish risk, potentially driving prices down to $1,500, though an alternative bullish scenario targets $2,000.
SanDisk (NASDAQ:SNDK) stock closed at $1,791 on Friday, about 20% above its low earlier this week. The rebound tracked other memory stocks, with the Roundhill Memory ETF (DRAM) closing the week at $59.60. Still, technical indicators point to limited upside in the near term.
SanDisk Stock Jumped as Memory Companies Rebounded
SNDK ended the week much higher than its lowest level on September 14. Other top memory stocks also bounced back. Micron (NASDAQ:MU) rose to $1,015, its highest level since September 9. Western Digital (NASDAQ:WDC) rose to $441, while SanDisk, Samsung Electronics, and SK Hynix also rose.
These stocks rose as investors assessed the impact of a potential slowdown in the artificial intelligence (AI) industry. The fears escalated after Anthropic’s CEO urged the industry to slow the development of new models. An Anthropic employee recently warned that the advancement may lead to human extinction.
Read Also: Crude Oil Price Rises on Hyperliquid as Houthi Hits Riyadh Airport
The general view is that memory companies will continue doing well as AI investments will continue in the near future. Analysts expect that the company’s revenue will jump by 363% to $10.6 billion this quarter. For the year, revenue is expected to jump by 141% to $48.9 billion. SanDisk often does better than expected, meaning that its real figures will be higher than this.
The company has worked to ensure that its business continues to grow in the long term. It has launched multi-year deals with some of the biggest companies, setting the floor and ceiling of NAND devices. The total minimum contracted revenue by these eight companies is worth about $98 billion.
SanDisk stock is also highly undervalued, with the forward price-to-earnings ratio falling to just 8. That explains why 71% of all analysts tracking it have a buy rating, with the most bullish one having a target of $3,050.
SNDK Stock Forecast: Technical Analysis
To some extent, SanDisk stock has bullish technicals. It remains above the Supertrend indicator and the 50-day and 100-day Exponential Moving Averages (EMA). The Relative Strength Index (RSI) has also continued rising.
However, the risk is that it has slowly formed a rising wedge pattern, which is made up of two ascending and converging trendlines. In most cases, this pattern leads to a strong bearish breakout.
Therefore, there is a risk that the stock will resume its downward trend, potentially to the psychological level of $1,500. The alternative scenario is where the stock continues rising, potentially to $2,000.
Read Also: XRP Price Prediction as Multiple Catalysts Point to Further Gains
Image: Shutterstock