Key Takeaways
- David Tepper’s Appaloosa Management exited its entire Sandisk (SNDK) position in Q2 2026 after initiating the stake only one quarter earlier, locking in substantial gains from a rapid AI‑driven memory rally.
- The sale reflects a disciplined profit‑taking approach rather than a bearish view on Sandisk’s long‑term prospects; Tepper cited the cyclical nature of the memory market as a reason to reduce exposure.
- Simultaneously, Appaloosa initiated a new position in Broadcom (AVGO), attracted by the company’s custom AI accelerators (XPUs), strong networking franchise, and multi‑year backlog that support a premium valuation despite high P/E multiples.
- Broadcom’s AI semiconductor revenue is projected to exceed $100 billion by fiscal 2027, underpinned by relationships with hyperscalers such as Google, Meta, OpenAI, Anthropic and Apple.
- While Tepper’s moves signal confidence in sustained AI capex, simply copying his trades carries risk; investors should evaluate the underlying thesis—capitalizing on AI infrastructure growth and reallocating capital after parabolic moves—rather than mirroring ticker symbols.
Why Selling Sandisk Stock Makes Sense
Sandisk produces NAND flash memory, the high‑speed storage technology that powers solid‑state drives (SSDs). In the AI infrastructure era, these products have become indispensable because AI data centers require vast amounts of fast, dense storage to hold training data and inference workloads. AI‑driven demand has fueled NAND prices sharply in recent quarters, shifting Sandisk’s revenue mix toward enterprise data‑center customers. Revenue and margins are expanding dramatically as sales surge and pricing power returns to the storage specialist.
“Sandisk produces NAND flash memory, the high‑speed storage technology that powers solid‑state drives (SSDs). In the AI infrastructure era, these products have become indispensable…”
This backdrop explains why Tepper initially built a position: the memory boom appeared to offer a near‑term catalyst for outsized returns.
Timing and Profit Realization
Filings show that Tepper initiated the Sandisk position during the first quarter of 2026 and subsequently exited completely sometime in the second quarter. While exact entry and exit prices are private, the timing alone implies substantial gains. Taking profits after such a parabolic move signals discipline. Smart investors understand that memory and storage markets are cyclical, meaning Sandisk’s valuation may already price in much of the near‑term AI surge. By securing gains after a single quarter, Tepper reduces exposure to unwanted volatility while freeing capital for other opportunities.
“Taking profits after such a parabolic move signals discipline. Smart investors understand that memory and storage markets are cyclical…”
The move is less a verdict on Sandisk’s fundamentals and more a tactical re‑allocation after a rapid rally.
Why Broadcom Might Appeal to Tepper
Broadcom designs and supplies semiconductors and infrastructure software. Over the last few years, the company has focused on custom AI accelerators known as XPUs. These chips are designed alongside hyperscale customers, rather than being sold as general‑purpose products. Broadcom makes Google’s Tensor Processing Units (TPUs) as well as Meta Platforms’ MTIA chips. The company also expanded relationships with OpenAI, Anthropic, and Apple, further diversifying the customer base. Broadcom also supplies high‑speed networking silicon that connects large clusters of these accelerators, giving the company exposure to both the compute and interconnect layers of the AI chip stack.
“Broadcom designs and supplies semiconductors and infrastructure software… Broadcom makes Google’s Tensor Processing Units (TPUs) as well as Meta Platforms’ MTIA chips.”
These capabilities position Broadcom as a critical enabler of the AI hardware ecosystem, a factor that likely resonated with Tepper’s focus on durable competitive advantages.
Broadcom’s AI Accelerator Strategy and Valuation
Despite trading at a lofty valuation based on‑price‑to‑earnings (P/E) and forward earnings multiples, Broadcom remains an attractive opportunity given its growth potential. AI semiconductor revenue is scaling rapidly, with management guiding for more than $100 billion in this segment alone by fiscal 2027. Robust operating margins, a wide competitive moat in custom silicon, and a backlog of multi‑year orders support Broadcom’s premium valuation profile. For an investor like Tepper, the combination of visible multi‑year growth, sticky customer relationships, and market leadership in a shift toward specialized AI hardware may outweigh rich multiples.
“Despite trading at a lofty valuation based on price-to‑earnings (P/E) and forward earnings multiples, Broadcom remains an attractive opportunity given its growth potential.”
The narrative hinges on the expectation that AI‑related capex will remain robust, justifying today’s premium.
Should Investors Follow Tepper’s Lead and Buy Broadcom Stock?
Tepper’s rotation away from a high‑flying memory name into a broader AI infrastructure stock reflects disciplined capital allocation rather than an endorsement of any specific stock. Smart investors can reasonably take note of his logic: book gains after an abnormal rally and redeploy capital into a company with deeper competitive advantages and potentially longer runway. While Sandisk’s recent pullback from its June peak has so far validated Tepper’s exit, Broadcom’s elevated valuation leaves little room for error. Against this backdrop, simply following Tepper’s trade carries risks.
“Tepper’s rotation away from a high-flying memory name into a broader AI infrastructure stock reflects disciplined capital allocation rather than an endorsement of any specific stock.”
The prudent approach, therefore, is to study the underlying thesis—sustained AI capex from big tech—and decide whether Broadcom’s growth story aligns with one’s own risk tolerance and investment horizon.
Conclusion: Discipline Over Mimicry
In my eyes, the more prudent approach is to study his underlying thesis rather than copying the ticker symbols. Investors who share Tepper’s conviction in sustained AI capex spending from big tech may find Broadcom a compelling long‑term holding. With that said, those who prefer pure‑play memory exposure could still find opportunities in the sector even after volatility subsides. Regardless, Tepper’s latest moves underscore a timeless lesson: Even the best investment ideas eventually require some harvesting, and the strongest portfolios always adjust to the market rather than remaining static.
“Regardless, Tepper’s latest moves underscore a timeless lesson: Even the best investment ideas eventually require some harvesting, and the strongest portfolios always adjust to the market rather than remaining static.”
By internalizing this discipline—realizing profits after parabolic moves and reallocating to firms with durable moats—investors can emulate Tepper’s process without blindly replicating his trades.
https://www.fool.com/investing/2026/08/22/billionaire-david-tepper-sold-his-funds-sandisk/