Billionaire David Tepper Dumped Sandisk for This Trillion-Dollar AI Chip Giant

Sandisk shares are down 27% from their 52-week high despite gaining 1,230% over the past year, as investors question how long the memory cycle and triple-digit sales growth can last; its fiscal 2026 fourth-quarter revenue rose 372% year over year and gross margin reached 84.6%. David Tepper closed his $179 million Sandisk position in Q2 and opened a Broadcom position. Broadcom reported fiscal Q3 revenue growth of 86% and AI semiconductor revenue growth of 221%, raised 2026 AI revenue guidance to $58 billion, and forecast $115 billion in 2027 and $230 billion in 2028.

Analysis

The key distinction is duration of earnings, not which AI stock has the better headline growth rate. SNDK’s exceptionally high gross margin makes it more exposed to a reversal in NAND pricing and utilization: even if AI demand keeps growing, new supply or customers slowing purchases could compress earnings faster than revenue. Its multiyear agreements may reduce spot-market volatility, but verify whether they commit buyers to volumes and how pricing resets; “long-term revenue” alone does not lock in margins. A contrary risk is that persistent AI storage demand and supply discipline extend the NAND upcycle, making the drawdown an overreaction.

AVGO offers a different risk: the AI revenue trajectory is management guidance, not contracted or realized earnings. Missing hyperscaler capex, customer concentration, delivery, and margin detail make the out-year estimates especially vulnerable to revision. Custom silicon and networking wins could support a longer-duration earnings stream, but a miss against elevated expectations could outweigh strong absolute growth. The quoted trailing P/Es do not establish relative value across a cyclical memory business and a diversified chip/software business.

Tepper’s reported Q2 repositioning is not a timely signal by itself; it may reflect portfolio constraints or a trade already realized. Near term, expect SNDK to remain sensitive to memory pricing and supply commentary. Over 1–3 months, contract terms and AVGO guidance conversion matter; over 6–18 months, NAND capacity response and hyperscaler deployment determine durability.

Key Decisions for Investors

• Do not copy the reported manager trade mechanically. For relative exposure, consider a beta-sized AVGO-long/SNDK-short pair only after reviewing current valuation, borrow, and earnings dates; cap risk because both legs retain AI-factor exposure.
• Stage any SNDK short rather than chase the drawdown. Falsify the bearish leg if subsequent results show resilient realized pricing and margins alongside enforceable multiyear volume commitments; monitor NAND contract pricing, inventory, and supplier capacity plans.
• Treat AVGO as a catalyst-dependent long, not a forecast-certainty trade. Before adding, verify AI revenue delivery versus guidance, customer concentration, and margins; reduce or exit on guidance cuts, delayed ramps, or hyperscaler capex deterioration.
• Watch the next earnings and supply updates for both names. If contract terms or customer commitments remain undisclosed, keep the view on alert rather than sizing a high-conviction position.