BlackRock says chip stock selloff is overstated

SanDisk Corp. (NASDAQ: SNDK) and Micron Technology Inc. (NASDAQ: MU) have declined sharply in recent weeks, but BlackRock argues the selloff is overstated. The world's largest asset manager stated Monday that markets are confusing a shift in AI competition with a collapse in AI investment, warning that cheaper AI models could accelerate adoption rather than reduce demand for chips. The firm maintains that lower costs expand the addressable market, reinforcing the need for data centers, networking equipment, and memory chips.

Market Dynamics and AI Adoption

The iShares PHLX SOX Semiconductor Sector Index Fund (NYSE: SOXX) fell 15% from June highs, briefly entering bear-market territory. Investor concerns centered on the belief that lower-cost Chinese large language models could undermine the economics of expensive frontier AI models, potentially reducing hyperscaler demand for cutting-edge chips. BlackRock countered this view, stating that cheaper AI changes the winners but not the investment case. The firm emphasized that broader adoption across industries would sustain demand for AI infrastructure, including power, chips, and data centers.

Earnings and Economic Outlook

BlackRock remains overweight U.S. equities despite geopolitical tensions, citing resilient economic growth and earnings expansion. The firm noted that consensus expects S&P 500 earnings growth of roughly 25% in 2026, up from 18% three months ago. It continues to recommend overweight exposure to AI bottlenecks such as power and chips.

Analyst Ratings and Price Targets

Analyst sentiment remains bullish on SanDisk and Micron. SanDisk has a consensus Outperform rating, with a blended average target of $1,418.14 from 22 analysts. Recent targets are significantly higher, with the last three notes averaging $2,666.67. Susquehanna has a Street-high target of $3,250.

Date	Firm	Price Target	Action	Rating
Jul 1, 2026	BofA Securities	$2,100 → $2,500	Maintains	Buy
Jun 30, 2026	Bernstein	$1,700 → $3,000	Maintains	Outperform
Jun 25, 2026	Citigroup	$2,025 → $2,500	Maintains	Buy
Jun 8, 2026	Mizuho	$1,825 → $2,200	Maintains	Outperform
Jun 8, 2026	Cantor Fitzgerald	$1,800 → $2,900	Maintains	Overweight

Micron Technology holds a Buy consensus with an average target of $1,316.79 from 29 analysts, implying roughly 36% upside from recent prices near $969. Recent analyst actions average $1,750, suggesting about 81% upside. Cantor Fitzgerald and Barclays share a Street-high target of $2,000, while Goldman Sachs holds a Neutral rating at $1,100.

Date	Firm	Price Target	Action	Rating
Jul 14, 2026	Keybanc	$1,600 → $1,750	Maintains	Overweight
Jun 29, 2026	Cantor Fitzgerald	$1,500 → $2,000	Maintains	Overweight
Jun 25, 2026	Barclays	$1,175 → $2,000	Maintains	Overweight
Jun 25, 2026	Citigroup	$1,200 → $1,400	Maintains	Buy
Jun 25, 2026	Goldman Sachs	$900 → $1,100	Maintains	Neutral

SanDisk has reported a revenue growth of 251.03%, significantly surpassing the industry average of 87.22% in the Technology Hardware, Storage & Peripherals sector. The company's Return on Equity (ROE) stands at 30.14%, which is 11.71% above the industry average, reflecting efficient equity utilization. Despite a lower gross profit of $4.66 billion compared to the industry average of $5.48 billion, SanDisk's EBITDA of $4.15 billion indicates robust cash flow generation.

SanDisk Background

SanDisk is one of the five largest suppliers of NAND flash memory semiconductors globally. SanDisk is vertically integrated, producing substantially all of its flash chips at manufacturing sites across Japan via a joint-venture framework with Kioxia. SanDisk then repackages most of its chips into SSDs for consumer electronics, external storage, or cloud storage. SanDisk was formerly a piece of Western Digital for nine years (after being acquired in 2016) and was spun off as an independent company in 2025.

Financial Metrics Comparison

SanDisk's valuation metrics present a mixed picture when compared to its major competitors. The Price to Earnings (P/E) ratio is 54.32, which is 0.52x lower than the industry average, suggesting potential undervaluation. Similarly, the Price to Book (P/B) ratio of 17.08 is 0.66x below the industry average. However, the Price to Sales (P/S) ratio of 18.29 is 1.75x higher than the industry average, indicating potential overvaluation relative to sales performance.

Company	P/E	P/B	P/S	ROE	EBITDA (in billions)	Gross Profit (in billions)	Revenue Growth
SanDisk Corp	54.32	17.08	18.29	30.14%	$4.15	$4.66	251.03%
Apple Inc	39.68	45.20	10.77	30.39%	$39.32	$54.78	16.6%
Seagate Technology Holdings PLC	84.61	184.27	18.25	96.27%	$1.0	$1.45	44.07%
Western Digital Corp	32.82	19.53	17.52	37.73%	$3.49	$1.68	45.47%
Hewlett Packard Enterprise Co	43.66	2.45	1.62	2.38%	$1.7	$3.9	40.0%
NetApp Inc	26.10	24.04	4.81	32.2%	$0.59	$1.36	12.47%
Everpure Inc	112.61	17.13	6.55	1.67%	$0.07	$0.72	35.25%
Super Micro Computer Inc	13.42	2.18	0.50	6.64%	$0.7	$1.02	122.68%
Logitech International SA	21.44	6.68	3.15	6.31%	$0.16	$0.48	7.44%
IonQ Inc	91.05	2.66	59.96	17.93%	$-0.23	$0.02	754.72%
Diebold Nixdorf Inc	30.41	2.99	0.84	0.47%	$0.07	$0.21	6.03%
Corsair Gaming Inc	109.72	1.63	0.72	1.85%	$0.03	$0.12	-4.12%
Turtle Beach Corp	650	2.31	0.88	-12.65%	$-0.01	$0.01	-34.0%
Average	104.63	25.92	10.46	18.43%	$3.91	$5.48	87.22%

Debt to Equity Analysis

SanDisk maintains a strong financial position with a debt-to-equity ratio of 0.01, which is lower than its top four peers. This indicates that the company relies less on debt financing and maintains a favorable balance between debt and equity. The low debt-to-equity ratio is viewed positively by investors, as it suggests reduced financial risk associated with the company's capital structure.

Key Takeaways

SanDisk's performance in the Technology Hardware, Storage & Peripherals industry highlights strong operational metrics. The low P/E and P/B ratios suggest potential undervaluation, while the high P/S ratio indicates overvaluation based on revenue. The high ROE, EBITDA, and revenue growth, coupled with a low debt-to-equity ratio, underscore the company's growth potential and financial stability compared to its peers.