SanDisk Corp. (SNDK) shares plummeted 8.01% during intraday trading on Thursday, marking a significant pullback for the memory chip stock that has been one of the standout performers of the AI rally.

The sharp decline comes as analysts and investors grow increasingly skeptical about the sustainability of SanDisk's valuation following its meteoric rise. The stock has surged from approximately $33 to over $1,400 per share within a year, representing a gain exceeding 3,500%, driven by AI infrastructure demand and $42 billion in long-term contracts with hyperscale cloud providers.

Analyst Louis Gerard has raised red flags, suggesting the market may be misjudging SanDisk's $42 billion in remaining performance obligations as guaranteed revenue. The analyst notes that while SanDisk delivered explosive fiscal Q3 2026 results with revenue up 252.1% year-over-year and non-GAAP gross margins reaching 78.4%, the current valuation premium over competitor Micron lacks fundamental support. A discounted cash flow model accounting for price normalization after 2027 implies approximately 70% downside from current levels, according to the analysis.