Hedge funds dump SanDisk, pile into TSMC as AI chip trade reshuffles

Stanley Druckenmiller’s Duquesne Family Office and David Tepper’s Appaloosa Management both made the same call in the second quarter of 2026: sell SanDisk, buy more Taiwan Semiconductor Manufacturing.

The rotation isn’t subtle. Appaloosa fully exited its SanDisk position, which had been worth roughly $179 million at the end of Q1, and raised its TSMC stake by approximately 24%, bringing its total TSMC investment to around $788 million. Duquesne trimmed its SanDisk exposure and increased its TSMC position by 19%, making the Taiwanese chipmaker the fund’s second-largest holding.

Why SanDisk fell out of favor

SanDisk had a remarkable run into mid-2026. Shares peaked at $2,354.39 on June 22 before selling off hard, falling roughly 31% by mid-August. That kind of move tends to trigger institutional profit-taking almost automatically.

Third Point and other funds made similar moves during the quarter, rotating out of Broadcom and into TSMC, reinforcing that this wasn’t a one-off call by a single manager.

TSMC’s numbers back the thesis

TSMC reported $40.2 billion in revenue for Q2 2026 and raised its capital expenditure guidance for 2026 to a range of $60 to $64 billion, signaling that management sees the current demand environment as durable, not a one-quarter spike.

That visibility comes largely from AI hyperscalers. Amazon, Google, Microsoft, and Meta are all racing to expand their AI compute infrastructure, and virtually all of their custom silicon gets fabricated at TSMC.

TSMC’s position as the world’s dominant advanced-node foundry also gives it a structural moat that is genuinely difficult to replicate. No other company can manufacture chips at 3-nanometer and 2-nanometer nodes at commercial scale.

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