SanDisk shares plunge 22%, wiping out March rally; hedge fund risk eyed

On Thursday, November 5, SanDisk (SNDK) shares tumbled 22.26%, closing at $806.43 on approximately 30 million shares traded. That volume was more than three times the 20-day average, pushing the memory chipmaker's price back to where it stood on March 20.

The selloff struck even after the company posted record quarterly figures. SNDK is now 66% off its June high of $2,354. At the same time, hedge funds continue to dismantle the artificial-intelligence positions they accumulated starting in 2025.

Why Did SanDisk Stock Crash After Record Earnings?

SanDisk reported October 29 quarterly revenue of $11.03 billion, a 378% jump from a year earlier. Data center revenue rose 61% sequentially to $4.80 billion.

Executives forecast current-quarter revenue of $12.2 billion to $12.6 billion. Yet Thursday's trading showed investors ignoring those figures.

The catalyst originated in Washington. Democrats secured control of both congressional chambers. Additionally, governor candidates who oppose rapid data center expansion prevailed in Texas, Georgia, and Ohio.

This is significant because SanDisk's enterprise solid-state drives go straight into those data centers. Arizona Representative Yassamin Ansari further intensified pressure by requesting a halt on advanced AI development in a post on X.

The Philadelphia Semiconductor Index (SOX) dropped roughly 12.3%, marking its worst day since March 2020, according to TradingKey data. The Nasdaq fell 5.5% and entered correction territory.

Is a Hedge Fund Blowup Next?

Some market participants view Thursday's crash as a signal for leveraged hedge funds. X user jarzoombek suggested that fund failures might be imminent.

His argument focuses on funds that rode AI winners for two years while betting against traditional companies expected to suffer from AI. No publicly available data has verified that particular positioning.

Yet broader positioning data backs the worry. In October, Hedgeweek referenced Goldman Sachs prime brokerage data showing hedge fund selling. Within five trading sessions, funds eliminated every net AI stock acquisition made since early 2025.

Morgan Stanley data indicates funds reduced overall exposure by about 7.8%, the steepest cut since the data series started in 2016. BeInCrypto reported on hedge funds offloading AI stocks during that period.

Memory chip companies suffered the worst. Samsung, SK Hynix, Micron, and SanDisk together lost more than $700 billion in market capitalization in under two weeks.

There is also a precedent for such risk. In July, margin calls reduced Leopold Aschenbrenner’s Situational Awareness fund from over $45 billion to roughly $10 billion. Two months afterward, that fund resumed buying SanDisk call options.

Bitcoin (BTC) dropped approximately 6.5% in a 48-hour reversal from above $80,800 to near $75,500. That decline was less than a third of SNDK's loss, a outcome jarzoombek described as positive for BTC.

Can SanDisk Stock Find a Floor Below $942?

On the daily chart, SNDK has fallen almost 58% from its September 22 swing peak near $1,909.

Thursday's candle breached the 0.786 Fibonacci retracement level at $942, which was the final support of the rally from late March. That session also recorded the highest volume bar on the chart since February.

At the same time, the Relative Strength Index (RSI) fell to around 25, the lowest level on the chart and deep in oversold territory.

Oversold conditions sometimes lead to bounce-backs, and SNDK rose to about $860 in after-hours trading. For a structural repair, bulls require a daily close above $942, then $1,000.

Above that, the $1,245 to $1,320 area close to the 0.618 Fibonacci level represents significant resistance.

On the downside, a break below $800 could open the path to $700. Further down, the 1.0 Fibonacci retracement at $558.58 is the March low from which the rally originated.

Nevertheless, SNDK's next direction might rely more on hedge fund positioning than on NAND demand. Technology stocks still constitute 23.5% of Goldman Sachs's global prime brokerage book, with significant AI exposure yet to be unwound.