Leopold Went Bust on SanDisk. His Bull Case Is Going To Play Out Anyway

SanDisk shares fell sharply last month, briefly raising concerns that its AI-storage outlook was shifting. However, the selloff had little to do with any deterioration in the company’s underlying business. The decline was not triggered by pricing pressure, weaker demand, or changes to customer contracts. Instead, a hedge fund was forced to sell down a massive position under pressure. The stock has since started to recover, supporting the view that the sell-off was driven more by forced selling than by a change in the fundamental story. The core investment case for SanDisk remains largely unchanged. 

Why Is Wall Street Still Bullish? 

Four pillars support the bull case for the stock. The first is the global NAND flash shortage, which has strengthened the company’s pricing power. Analysts expect the supply constraint to persist as a structural trend rather than quickly return to normal. Second, SanDisk has improved its revenue visibility through multi-year supply agreements. More than 50% of its fiscal 2027 NAND bit supply is already committed under New Business Model contracts. That commitment helps reduce the company’s exposure to volatility in NAND spot prices. The third pillar is management’s long-term financial roadmap, which was presented at the 2026 investor day on August 13. The plan targets mid-to-high-teens revenue growth, 75% operating margins, and roughly 80% gross margins through fiscal 2030. Finally, SanDisk has reinforced its bullish outlook through capital returns. The company approved a $14 billion buyback program as it continues to deliver record quarterly results. 

What Actually Happened: A Forced Sale, Not a Fundamental Break 

The story behind SanDisk’s selloff last month starts with Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner. Its latest 13-F filing highlights just how aggressively the fund increased its exposure during the second quarter of fiscal 2026. SanDisk holdings went from roughly 1.1 million shares worth $724.4 million at the end of Q1 to nearly 2.5 million shares valued at more than $5.6 billion by June 30. By the end of the quarter, it had become one of Situational Awareness’ largest holdings. 

That level of concentration became a problem in July when a broader AI-driven selloff pushed shares sharply lower. The losses were significant enough to force Situational Awareness to sell a substantial portion of its public equity portfolio to Ken Griffin’s Citadel. SanDisk’s decline looks different when viewed in the context of the forced selling. The stock came under pressure because a major holder was forced to liquidate its position under difficult market conditions, not because contracts were lost, customers pulled back, or pricing changed. That difference matters because it suggests the selloff was driven by positioning rather than a change in the company’s fundamentals.

Risks To Watch 

The bull thesis still carries several risks investors need to consider. The memory industry remains highly cyclical, and the current supply shortage is supporting NAND pricing. That dynamic could eventually reverse if manufacturers respond by expanding capacity too aggressively. Valuation is another concern, particularly after the stock’s sharp gains this year. The higher valuation increases the stock’s sensitivity to any slowdown in NAND pricing momentum. The Situational Awareness event appears to be company-specific and potentially a one-off. However, concentrated positions at other funds could still create periods of volatility if similar forced selling or position reductions occur elsewhere. 

nDisk’s fundamentals did not change when the stock came under pressure last month. A single heavily positioned holder was forced to sell, while the company’s fundamental case remained unchanged throughout the volatility. The factors supporting the investment thesis, including structural pricing power in NAND, multi-year supply contracts, long-term margin targets, and a significant buyback program, all remained intact throughout the period. 

Wall Street Analysts Agree With Leopold's Thesis

Wall Street has also remained broadly bullish on the stock, with multiple firms maintaining Buy ratings and raising their price targets despite the recent volatility. In the last week, JP Morgan revised its price target upward from $1500 to $2250. RBC Capital and Wells Fargo also did the same, bringing their price targets to $1600 and $1500 respectively.