Why Sandisk Stock Is Still Dropping

SanDisk stock dropped 9.6% despite news that should theoretically benefit the NAND flash maker. The sell-off followed TSMC's second-quarter earnings beat and its announcement that capital expenditure will climb to $60 billion, up from the $54 billion forecast.

The market penalized TSMC on concerns over elevated spending, and SanDisk traded in sympathy. Yet the underlying catalyst—TSMC's expanded chip production capacity targeting AI applications—points to increased demand for the NAND flash memory chips SanDisk manufactures. CPUs and GPUs produced by TSMC require pairing with flash storage, creating a direct demand link.

The disconnect presents a potential mispricing. TSMC's willingness to spend an additional $6 billion signals confidence in AI chip demand through its manufacturing cycle. That demand translates into higher memory requirements, a core revenue driver for SanDisk. The stock's 9.6% decline appears to reflect contagion from TSMC's capex reaction rather than any fundamental deterioration in SanDisk's business outlook.