Why Does Sandisk Stock Keep Going Down?

Sandisk (NASDAQ: SNDK) banal is successful a three-day slump.

Spooked by reports that Korea mightiness privation to taxation AI profits earlier successful the week, Sandisk shares sold disconnected Tuesday -- and past kept connected going down. Shares of the company, which specializes successful producing NAND flash representation for usage successful artificial intelligence, slipped different 4.3% done 10:55 a.m. ET Thursday.

And determination doesn't look to beryllium immoderate atrocious quality to explicate it.

Good quality from China

The contrary, actually.

Over successful China, Nvidia (NASDAQ: NVDA) CEO Jensen Huang accompanied President Trump connected his sojourn to conscionable with President Xi Jinping, and announced a woody that volition licence it to vessel H200 artificial quality chips to the Middle Kingdom. Logically, much AI chips connected the marketplace implies much request for machine representation to enactment them -- which should beryllium bully quality for Sandisk, not bad.

Viewed successful this context, it's a spot unusual to spot Sandisk banal falling today, but for 1 thing.

One happening astir Sandisk

Not to enactment excessively good a constituent connected it, but the happening that concerns maine astir astir Sandisk isn't request for its NAND -- that seems firmly connected the upswing. What worries maine astir Sandisk is the terms investors are paying for this growth.

Sandisk shares outgo much than 53 times trailing net adjacent aft their sell-off, and the price-to-free currency travel ratio looks adjacent much costly astatine 66x. Granted, with net expected to much than triple adjacent twelvemonth (and FCF to much than double), and support increasing into 2028, Sandisk banal mightiness inactive beryllium "worth it."

There's conscionable a batch riding connected assumptions that Sandisk profits volition support growing, and not succumb to the accustomed boom-and-bust slump of a cyclical semiconductor stock. Caveat investor.

Should you bargain banal successful Sandisk close now?

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