Billionaire Ken Griffin runs Citadel Advisors, the most profitable hedge fund in history; Citadel sold shares of SanDisk and bought stock in D-Wave Quantum in the third quarter.
SanDisk develops storage devices based on NAND flash memory; Those chips are currently in short supply due to demand for AI infrastructure, but the cyclical nature of the industry presents a huge risk.
D-Wave Quantum was the first company to commercialize quantum computers and cloud quantum services, but its products are years away from mainstream adoption and the stock is absurdly expensive.
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SanDisk(NASDAQ: SNDK ) is one of several semiconductor companies that have benefited from a severe supply shortage in memory chips driven by demand for artificial intelligence. The stock is up 1,050% since the spin-off Western Digital In February 2025.
Meanwhile, D-Wave Quantum(NYSE: QBTS) One of the many pure-play quantum computing companies that has captivated investors. The stock is up 1,900% since January 2023.
In the third quarter, Citadel Advisors (a hedge fund run by billionaire Ken Griffin) sold about 2 million shares of SanDisk, reducing its position by 97%. Citadel also bought stock in D-Wave Quantum. Neither position is/was very large, but the trades are still notable because Citadel is the most profitable hedge fund in history.
Here’s what investors should know about SanDisk and D-Wave Quantum.
Image source: Getty Images.
Sandisk is a semiconductor company that develops data storage solutions based on NAND flash memory for edge devices (computers, smartphones) and data centers. The core of its business is a joint venture with Japanese manufacturer Kioxia. Both companies realize cost efficiencies and supply chain security by sharing R&D expenses and capital expenditures related to designing and manufacturing memory chips in-house.
Sandisk has another significant advantage in its vertically integrated business model. The company not only manufactures memory wafers through its joint venture, but also packages the wafers and integrates the chips into end products such as solid state drives (SSDs). This allows Sandisk to optimize the performance and reliability of its storage products in a way that other (less vertically integrated) suppliers cannot.
Significantly, while SanDisk’s non-GAAP earnings fell 33% in the first quarter, the company expects adjusted earnings to grow 160% in the second quarter due to an unprecedented supply shortage in memory chips created by insatiable demand for artificial intelligence (AI) infrastructure. Experts generally believe supply shortages will persist through 2026, indicating strong growth in the next few quarters.
In fact, Wall Street expects SanDisk’s adjusted earnings to grow 259% year over year through the fiscal year ending in June 2027. Under different circumstances, this would make a valuation of 170 times current earnings appear reasonable. But the memory chip industry is notoriously cyclical, and current supply constraints likely mean we’re nearing a peak.
But what? Once memory chip supply begins to outstrip demand, SanDisk will quickly lose pricing power and the market could cost the stock a much lower price-to-earnings multiple. In other words, shares may fall (perhaps sharply) at some point in the future. Of course, no one knows when that day will come, but Ken Griffin’s decision to sell makes sense in that regard.
D-Wave develops superconducting quantum computing systems. The company is best known for quantum analyzers, although it also develops gate-based machines. Annealers are designed for optimization problems, while gate-based quantum computers (also known as global systems) can run any quantum algorithm.
Importantly, while gate-based machines will eventually be able to solve more problems, annealing systems are currently easier to scale because they are less sensitive to errors. This informed D-Wave’s decision to focus on annealing systems, allowing it to become the first company to commercialize a quantum computer in 2011 and the first to offer cloud-based quantum services in 2018.
That first-mover advantage means D-Wave has customer relationships that could make it an option as quantum computing technology matures. Furthermore, as the only company to manufacture analyzers and gate-based machines, D-Wave has an edge over pure-play competitors because its ability to monetize niche quantum services in the near term helps fund global systems R&D in the long term.
CEO Alan Baratz has commented to this effect: D-Wave systems can already solve problems beyond the scope of the most advanced supercomputers. While this is true, it is somewhat misleading. D-Wave systems won’t be useful to most enterprises for years. In fact, Grand View Research estimates that quantum computing sales will only total $4 billion in 2030, meaning the market (at that point) will still be about 100 times smaller than the AI market (ie, AI sales total $390 billion in 2025).
Although mainstream adoption is several years away, D-Wave stock currently trades at 347 times sales. That’s absurdly expensive, even though analysts predict the company’s sales will grow 70% annually through 2027. This stock is in bubble territory, and I feel like Ken Griffin added a very small position to capitalize on the momentum because he has no lasting faith in the company. It is too early to predict long-term winners and losers with high confidence.
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Trevor Genevin has no position in any of the stocks mentioned. Motley Fool has no position in any of the stocks mentioned. Motley Fool has a disclosure policy.
Billionaire Ken Griffin Sells SanDisk Stock and Buys Quantum Stock Up 1,900% in Early 2023 Published by The Motley Fool.
