Billionaire David Tepper Sold Micron and Sandisk, and Is Hedging Against 1 of Their Largest Customers - fool.com

Prominent hedge fund manager David Tepper's Appaloosa Management significantly reduced its stakes in Micron Technology and SanDisk during Q2, while simultaneously purchasing put options on Apple Inc.,... Read original →

David Tepper's reduction in Micron and SanDisk positions, coupled with the purchase of Apple put options, signals growing concerns over the cyclical nature of the semiconductor industry. While AI-driven data center expansion has fueled memory chip demand and stock appreciation, Tepper anticipates that elevated chip prices may erode Apple’s gross margins amid increasing competition and supply constraints. This strategic hedge reflects a contrarian stance, as Apple’s current valuation of 36x forward earnings appears stretched. The move impacts the upstream supply chain, potentially leading to reduced capital expenditure among memory producers, while placing downward pressure on downstream pricing power. From a compliance perspective, global supply chain disruptions—especially in Taiwan, China and Hong Kong, China—introduce heightened operational risks. Competitors like SK Hynix and Micron may accelerate R&D or pursue M&A to optimize capacity and resilience. Over the next 12–24 months, a potential cooling of AI demand could trigger a market correction in memory chips, with capital increasingly flowing toward firms with strong cost control and technological moats.