SanDisk shares have tumbled 47% in just one month, battling to hold onto their last line of support amid a brutal downturn in the memory chip sector. After months of soaring gains, the stock is now unraveling rapidly.
On Tuesday alone, SanDisk dropped 14% to around $1,096 per share, wiping out weeks of previous rally profits. The catalyst was disappointing quarterly results from South Korea’s SK Hynix, which posted revenue and operating profit below analyst expectations. This sparked fears that the AI-driven boom in memory chip demand could be fading. The weakness rapidly spread to related stocks such as Micron and Western Digital.
Technical Warnings Flash Bearish Signals
The charts reveal deeper trouble. SanDisk’s 20-day EMA recently crossed below its 50-day EMA, a classic bearish indicator that preceded a 35% fall. The stock has since fallen under the 100-day EMA, leaving only the 200-day EMA near $995 as a significant support level.
Adding to the gloom, a head and shoulders pattern a reversal signal where a peak sits between two lower highs completed as the neckline broke. This setup implies the stock could drop another 39% from that point. Selling volumes surged, suggesting sellers are firmly in control. One market analyst noted that SanDisk has erased $196 billion in market cap during this brief, intense selloff.
Institutional investors began offloading shares much earlier. The Chaikin Money Flow indicator, which tracks big money buying and selling, weakened starting in early May despite the rally, signaling diminishing support beneath the price.
This selloff follows a period of euphoria fueled by massive AI chip contracts in the semiconductor industry, mainly led by SK Hynix and Samsung. The swift reversal highlights the volatility underpinning memory stocks and the risks tied to AI demand projections.
This article is for informational purposes and does not constitute financial advice.
