Sandisk Trades at 43 Times Earnings and 7 Times Next Year's Earnings Estimates. What Has to Go Right for the Cheap Number to Win?

Shares of memory maker Sandisk (NASDAQ: SNDK) fell 10.8% on Friday, then another 11% on Monday, closing at $1,278.23. There was no company news behind either drop. Memory and artificial intelligence (AI) infrastructure stocks sold off as a group, and Sandisk, one of the biggest winners of the past year, fell harder than most.

The decline puts a spotlight on one of the stranger valuation puzzles in the market right now. Measured against its earnings over the past 12 months, Sandisk trades at about 43 times. Measured against what analysts expect over the next 12, however, it trades at about 7. Same company, same stock price -- the only thing that changes is which earnings you divide by.

Both calculations do honest math. They just describe different companies: the one Sandisk was a year ago, and the one analysts are betting it is becoming.

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