David Tepper’s Appaloosa Management shifted heavily toward megacap tech stocks in Q2 while trimming or exiting once-hot memory chip investments.
The 13-F filing for the quarter ended June showed that Tepper cut his Micron Technology Inc. (NASDAQ:MU) stake by over 41% to about $1.125 billion and completely exited a more than $400 million SanDisk Corp. (NASDAQ:SNDK) position, appearing to reduce exposure to memory stocks ahead of their July decline.
Despite slashing the stake in Micron, the position’s value nearly doubled to $1.125 billion as Micron shares surged 242% in Q2, fueled by strong AI memory demand, record results and tight DRAM supply.
Meanwhile, Stanley Druckenmiller‘s Duquesne Family Office completely dumped its stake in Micron.
Memory Demand Powers Bigger Cash Flows
AI-driven demand is keeping the memory market tight despite capacity expansions by Samsung Electronics Co. Ltd. (OTC:SSNLF), SK Hynix Inc. (NASDAQ:SKHY) and Micron. Counterpoint Research expects meaningful supply relief only by 2028 at the earliest, as AI demand increasingly strains conventional DRAM alongside HBM.
Trivariate Research’s Adam Parker said tight memory supply could extend Micron’s earnings cycle. Parker believes markets are underestimating Micron’s earnings durability and free cash flow, potentially approaching $300 billion over two years. The analyst also said that he wouldn’t be surprised if the company eventually reaches a $1 trillion market cap.
At the same time, Cantor Fitzgerald analyst CJ Muse expects Sandisk to generate about $150 billion in free cash flow over four years, supported by long-term pricing contracts and shareholder-focused capital returns. He also views the company’s 50% free cash flow margin target as a strong positive signal.
Tepper Loads Up On Big Tech
David Tepper’s Appaloosa significantly increased its bets on the Magnificent Seven, boosting Amazon.com Inc. (NASDAQ:AMZN), Meta Platforms Inc. (NASDAQ:META) and Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) holdings and creating a position of over $241 million in Apple Inc. (NASDAQ:AAPL). Amazon remained its largest holding at nearly $1.2 billion.
Wall Street Journal report found that Big Tech has accumulated about $3 trillion in future AI spending not fully reflected on balance sheets. Famed "Big Short" investor Michael Burry said he warned about the spending months earlier and hinted that today’s market risks could face similar scrutiny in 2027.
A WSJ analysis found that Big Tech’s financial commitments extend far beyond their reported balance sheets. Alphabet, Amazon, Meta and Microsoft have $248 billion in lease liabilities and $356 billion in long-term debt, but much of their obligations remain off-balance sheet.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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