JPMorgan cautious on Sandisk, sees risk of earnings normalization

Investing.com -- JPMorgan initiated coverage of Sandisk (NASDAQ: SNDK) with a Neutral rating and a $235 price target, warning that the stock’s significant year-to-date rally leaves limited room for further multiple expansion.

Analyst Harlan Sur wrote that Sandisk does offer leverage to the “AI-driven enterprise solid state disk (eSSD) supercycle,” but emphasized that the company has “much smaller AI exposure compared to peers.”

According to JPMorgan, that relative positioning matters as investors rotate toward firms with broader datacenter optionality.

JPMorgan also highlighted Sandisk’s structurally advantaged cost base through its Kioxia joint venture.

However, the firm cautioned that current pricing conditions reflect “a cyclical peak rather than a structural reset.”

Sur noted that capacity expansions planned for 2027 and beyond “threaten to erode the current healthy supply/demand situation,” raising the risk of margin pressure just as traditional end-market growth begins to mature.

“We see risk-reward as balanced, with near-term upside from an extended upcycle offset by the risk of earnings normalization as the industry reverts to its historical boom-bust pattern,” Sur wrote.

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