Short interest in Sandisk Corp. has been climbing for months alongside a sharp rally in the stock, pushing the risk of a short squeeze to an “extreme” level, according to S3 Partners LLC.
“Short sellers have moved in lockstep over the last few months, utilizing a reversal strategy by shorting aggressively into the rally,” the firm’s research team wrote in a note. Since early November, short interest — a metric that shows the proportion of available shares that have been borrowed and sold by bearish traders — has risen to 7.5% of the float from about 4%, while S3’s short-squeeze risk score has climbed to 82.5. Mark-to-market losses on short positions have reached roughly $3 billion, driving the score to what the firm describes as extreme.
A short squeeze occurs when a rapid rise in a stock’s price forces short sellers to buy back borrowed shares to close their positions, often at a loss, which can drive the price even higher.
Sandisk shares have surged about 105% so far this year, far outpacing the S&P 500 Index’s gain of about 0.8% and leading the index’s top performers in 2026. Shares slipped as much as 4.7% in Friday morning trading, though they were set for a sixth consecutive weekly gain.
The rally comes as the artificial-intelligence trade rotates toward storage stocks and as global flash memory shortages allow the company to raise prices, according to S3. Earlier this month, SanDisk jumped after Nvidia Corp. Chief Executive Officer Jensen Huang highlighted the growing need for memory at the CES technology conference, calling storage a “completely unserved market.”
Western Digital Corp. spun off its flash-memory business in February 2025. Shares of the re-listed Sandisk have since climbed about 1,200%.
