10% yields… from a gold security? (From Golden Portfolio)

Flash memory producer Sandisk Corp. (NASDAQ: SNDK) officially entered the S&P 100 this week, another accolade for the soaring stock and a move that puts it alongside some of the market’s most prominent megacaps. Inclusion in major indices like the S&P 100 brings prestige, but it also means index-tracking funds must buy the stock.

The change was announced on Sept. 4, and the stock gained nearly 12% in the session before quietly surrendering those gains over the next week. Now the stock is ripping higher again as indices rebalance at quarter end, but how much of this bull case rests on S&P 100 inclusion? The answer is likely that the index rebalancing has minimal impact, and the stock’s 2026 surge is a story of NAND demand and a company at the peak of its earnings cycle.

The Index Flow Is Relatively Small Compared to Average Daily Volume

While Sandisk executives likely still broke out the champagne this week, S&P 100 inclusion is more a badge of honor than a demand driver. Sandisk joined Dell Technologies Inc. (NYSE: DELL), Palo Alto Networks Inc. (NASDAQ: PANW), and Arista Networks Inc. (NYSE: ANET) in the index, replacing Colgate-Palmolive Co. (NYSE: CL), Nike Inc. (NYSE: NKE), Simon Property Group Inc. (NYSE: SPG), and Honeywell Aerospace (NASDAQ: HONA). The theme of these additions is pretty clear: tech is in, and consumer goods and REITs are out.

But the large caveat here is that Sandisk is already a member of the S&P 500, which is a far more newsworthy event. The massive index funds that use it as a benchmark have already brought Sandisk into the fold, and adding it to the S&P 100 offers only an incremental layer of forced buying. Take the iShares S&P 100 ETF (NYSEARCA: OEF), for example. The cap-weighted fund has a market capitalization of just $20 billion, compared to the iShares S&P 500 Core ETF (NYSEARCA: IVV) and its $851 billion market cap. A stock like SNDK trades more than 15 million shares per day on average, so average dollar volumes surpass OEF's entire market cap daily. Inclusion in a fund like IVV certainly moves the needle, but on market mechanics alone, addition to the S&P 100 is a non-event for SNDK shareholders.

NAND Demand Is Strong But Decelerating, and Company Valuation Implies Peak Earnings

Notably, the S&P 100 “pop” in SNDK shares also drew sympathy from other memory stocks like Western Digital Corp. (NASDAQ: WDC) and Micron Technology Inc. (NASDAQ: MU). An industry-wide move implies industry-related trends, and it appears the AI/NAND trade is once again driving the stock. But while NAND demand remains robust, pricing growth is slowing, and that’s being reflected in the valuation.

No need to rehash the top-line numbers; SNDK smashed its fiscal Q4 2026 earnings report on Aug. 5 with record revenue, record gross margins, and record quarterly earnings per share (EPS). Data center revenue more than doubled quarter-to-quarter, and management lifted fiscal Q1 2027 revenue estimates 18% above previous projections. But the consumer-driven segment declined 32% from fiscal Q3, and margin guidance for fiscal Q1 2027 is lower than the 84.6% figure from fiscal Q4 2026.

Gross margins over 80% are still spectacular, full stop. But the stock now trades at just nine times forward earnings with a Price-to-Earnings Growth (PEG) rate of 0.18, which implies we are in the middle of the absolute earnings peak. NAND memory is typically a highly cyclical industry, and while data center revenue has disrupted the traditional business model, consumer demand through devices has fallen rapidly.

When will the music stop for SNDK shares? Even analysts aren’t sure. The consensus price target of $2,015 implies about 7% upside from current levels, but the average hides the discrepancy between analysts. Susquehanna and New Street Research both have targets above $3000 on the stock, but Wells Fargo and Royal Bank of Canada have $1550 and $1600, respectively.

Chart Shows Uptrend Regaining Strength Following Overbought Sell-Off

According to the daily chart, the music is still playing for now. After a downtrend reset stock prices in the AI trade, momentum has returned, and SNDK shares have recovered key technical milestones. A bullish crossover on the Moving Average Convergence Divergence (MACD) indicator signaled the bottom in early August, and the stock quickly resumed its ascent above the 50-day moving average.

Both the MACD and signal lines have passed above the histogram, giving buyers an all-clear sign to re-enter the trade. The stock is trading near its highest level since its July all-time high, and the 50-day moving average is once again acting as support. The next catalyst for SNDK will be Micron's fiscal Q4 2026 print on Sept. 30, which will offer hints on NAND and DRAM pricing trends.

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