Sandisk: A Cautionary Tale

Sandisk, recently severed from the predictably ponderous Western Digital, has enjoyed a run that would make even the most seasoned speculator blush. A rise of sixteen-hundred percent in a mere twelve months. One suspects the enthusiasm is less a testament to intrinsic value than a collective lapse in reason. The market, as ever, is prone to these fits.

Its prominence in this current hysteria stems from its role as a supplier of storage for the artificial intelligence bubble. These devices, it is said, are crucial for the storage of the vast quantities of data required to train these digital mimics. One pictures endless server farms, humming with the futility of it all. A modern Tower of Babel, built not of stone, but of silicon.

The question, naturally, is whether one might still profit from this particular folly. Or, rather, whether one might not simply be buying at the apogee of the madness. The latecomer, as always, faces a distinctly unappetizing prospect.

The difficulty lies in the valuation. The stock has, shall we say, priced in perfection. A condition rarely, if ever, met in the real world. The company currently benefits from a shortage of storage devices for data centres. This allows them to impose prices that are, frankly, impertinent. But such advantages are, by their very nature, temporary. As production increases – and competitors, inevitably, will compete – margins will contract. The inevitable price war looms, and Sandisk, like all others, will be forced to yield.

One suspects the downside, at this juncture, outweighs any potential upside. The stock is, in essence, a monument to optimism, built on foundations of sand. A fitting metaphor, perhaps. For the discerning investor, a cautious avoidance would be the most sensible course. There are, after all, more rational ways to lose one’s money.

2026-02-19 19:53

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