Why Stock Investing Remains Unpredictable: The Sandisk Lesson

The investment world offers a compelling reminder about the nature of uncertainty through the recent performance of technology companies. Sandisk, a storage solutions provider that was spun off from Western Digital in early 2025, exemplifies why making money in the stock market is far more complex than many investors assume. After remaining relatively dormant for three decades—valued at just $5 billion upon its recent return to public markets—the company has now become one of the market’s brightest performers, doubling in value within weeks. Yet this explosive growth raises fundamental questions: Should investors have bought at the spinoff? Should they sell now? The answer to both is: it’s not obvious.

The Core Problem: Predicting Future Business Value

At the heart of successful investing lies an elegant but elusive concept championed by legendary investor Warren Buffett—the notion of intrinsic value. This framework suggests that every business has a true worth determined by the cash it will generate in future years. In theory, if investors could accurately calculate these future cash flows, they could buy stocks trading below their true value and virtually guarantee profits.

The challenge is fundamental: nobody can reliably predict the future. This uncertainty makes calculating future cash flows extraordinarily difficult. It’s precisely why nothing about Sandisk appears obvious at current valuations. The company’s profitability potential remains unclear because the trajectory of its revenue streams cannot be known with certainty.

The parallel to Nvidia illustrates this principle. In late 2021, that semiconductor company’s stock had already surged roughly 1,000% over five years, yet it traded at an extreme valuation—approximately 100 times its annual earnings. Most observers considered it overpriced. Nevertheless, the stock has appreciated another 500% since then because the business has fundamentally transformed. Artificial intelligence infrastructure demand created unprecedented demand for its products, pushing earnings growth far beyond what historical models predicted.

Why Sandisk Could Sustain Higher Profits

Sandisk faces a similar dynamic but in the memory storage domain. The latest wave of AI advancement focuses on inference—the ability of AI systems to make decisions in novel situations based on learned patterns. This computational approach is memory-intensive by nature. As a result, Sandisk’s management projects that global shipped memory capacity will more than double between 2025 and 2029.

The current market conditions are acute: demand is outpacing the available supply of memory products. This mismatch is driving prices to record levels, which naturally expands profit margins across the industry. Wall Street analysts remain uncertain about the ultimate ceiling for Sandisk’s earnings potential, regularly revising their estimates upward as new data emerges.

Embracing Uncertainty as Part of the Investment Process

The real lesson for portfolio managers isn’t that perfect prediction is possible—it isn’t. Rather, investors should recognize that reasonable assumptions about future business trends can still lead to sound decisions, even though some assumptions will inevitably prove wrong. The art of investing lies in tolerating this inherent imperfection.

However, when investors successfully identify a genuine business transformation—a legitimate winner—the long-term returns can be substantial enough to offset numerous smaller mistakes elsewhere in the portfolio. This is why holding quality positions through their growth cycles matters so significantly to building wealth.

Sandisk may or may not sustain its current momentum, and its valuation may expand further or contract. But the stock serves as a useful reminder that the intersection of business fundamentals, market timing, and pure uncertainty is what makes stock investing challenging, unpredictable, and ultimately rewarding for those willing to embrace its inherent complexities.