Sandisk (SNDK) Stock; Drops 12% as Analysts Eye $3,100 Upside Despite $6.2 Billion Revenue Gap

TLDRs;

• Sandisk shares fell roughly 12% despite Evercore raising its price target to $3,100 on stronger long-term earnings expectations.
• Only $6.24 billion of Sandisk’s $41.6 billion contracted backlog is expected to convert into revenue within one year.
• Robust AI-driven data center demand, new NAND technology, and long-term contracts continue supporting Sandisk’s optimistic growth outlook.
• Investors now await August earnings for updates on backlog conversion, contract execution, and future revenue recognition timelines.

Sandisk (NASDAQ: SNDK) shares dropped approximately 12% on Monday, even as Wall Street analysts became increasingly optimistic about the company’s long-term prospects. The sharp decline came after Evercore ISI significantly increased its price target on the stock to $3,100, nearly doubling its previous estimate of $1,400.

The contrasting market reaction reflects growing investor concerns over when Sandisk’s sizable contracted revenue will actually begin contributing to earnings. While analysts remain confident in the company’s long-term profitability, questions surrounding near-term revenue recognition have overshadowed the bullish outlook.

According to Sandisk’s latest regulatory filing, the company reported approximately $41.6 billion in remaining performance obligations (RPO), representing contracted revenue that has yet to be recognized. However, only about $6.24 billion, or roughly 15% of that backlog, is expected to be recorded as revenue over the next 12 months.

That timing mismatch has fueled concerns that investors may need to wait longer before the company’s expanding order book translates into reported financial results.

Analysts Maintain Bullish Outlook

Despite the stock’s decline, analysts continue to argue that Sandisk’s earnings potential remains significantly undervalued.

Evercore ISI believes investors are placing too much emphasis on near-term revenue timing while overlooking the durability of Sandisk’s future earnings and free cash flow. Its $3,100 price target implies substantial upside from current trading levels.

Sandisk Corporation, SNDK

Goldman Sachs bases its valuation on normalized calendar-year 2026 earnings, assigning a $2,200 target price. Bernstein, meanwhile, estimates fiscal 2027 earnings that support a price target near $3,000.

The differing forecasts largely stem from varying assumptions regarding when Sandisk’s expanding production capacity and recently signed long-term agreements will begin contributing to profits.

Evercore expects more than one-third of Sandisk’s fiscal 2027 memory output to come from newly signed contracts, many of which are projected to generate gross margins exceeding 80%.

AI Demand Supports Growth

Although investors questioned revenue timing, Sandisk‘s underlying business continues to show strong operational momentum.

During its most recent fiscal third quarter, the company nearly doubled revenue sequentially to $5.95 billion. Data center revenue surged 233% to approximately $1.47 billion as artificial intelligence infrastructure investments continued driving demand for high-performance NAND flash memory.

Sandisk also reported a gross margin of 78.4%, highlighting improving profitability as pricing and product mix strengthened.

For the current quarter, management expects revenue between $7.75 billion and $8.25 billion. The company has also secured two additional customer agreements since the quarter ended, further expanding its long-term contracted business.

Chief Executive Officer David Goeckeler previously described the company’s recent performance as a “fundamental inflection point,” reflecting confidence that demand from AI infrastructure and enterprise storage customers remains strong.

The company’s latest BiCS10 flash memory technology delivers approximately 59% greater bit density than its predecessor while increasing interface speeds by up to 33%. Those improvements are expected to lower storage costs while improving efficiency for customers deploying AI workloads and cloud infrastructure.