Buying growth stocks and holding them for a long time can help investors achieve market-beating returns, though there will be bouts of volatility along the way.
After all, growth stocks represent companies capable of growing at a faster pace than the industry in which they operate, so investors can decide to book profits when they become cautious. The same has been the case with Sandisk (NASDAQ:SNDK).
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Shares of the memory specialist have surged by an incredible 827% over the past year. However, the semiconductor stock has pulled back 44% from the 52-week high it reached on June 22. The recent slide in Sandisk’s shares can be attributed to concerns about the sustainability of the favorable demand-supply environment in the NAND flash market, as well as the viability of the huge outlay on artificial intelligence (AI) infrastructure.
Also, investors are fearing that potential competition from China could derail Sandisk’s impressive growth. However, I feel that these fears are overblown, and the recent pullback in Sandisk stock gives investors a terrific opportunity to buy a top growth stock at an attractive valuation. Let’s look at the reasons why.
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Sandisk’s slide is a result of the market’s overreaction
Sandisk stock took a big beating in July after Chinese memory company ChangXin Memory Technologies (CXMT) went public, causing panic in the memory sector as it aims to compete with giants like Micron Technology. Further, CXMT’s claims that it is developing an advanced dynamic random-access memory (DRAM) chip have also weighed on the memory sector, including Sandisk.
Investors, however, should note that Sandisk doesn’t compete with CXMT. Sandisk manufactures NAND flash storage products, a market that CXMT has yet to address. Also, even CXMT’s existing DRAM technology is reportedly well behind the likes of Micron and SK Hynix. Given that CXMT was reportedly asking potential customers for prices at par with leading memory makers, such as Samsung and SK Hynix, it is hard to see it making a dent in the DRAM market until its promised technological gains materialize.
So, the fear created by the emergence of CXMT seems overblown. What’s more, this isn’t the first time that the emergence of a potential threat from China has created panic in the stock market. The launch of DeepSeek at the beginning of 2025 was reportedly set to signal the end of high AI infrastructure spending, but that hasn’t been the case, as AI usage continues to increase.
