Ken Griffin's Portfolio Shift Exposes Diverging Investment Thesis in Tech

When one of history’s most successful hedge fund managers reshuffles his holdings, the market takes notice. In the third quarter, Ken Griffin’s Citadel Advisors—widely recognized as the most profitable hedge fund ever—executed two significant trades that tell very different stories about market dynamics, valuation cycles, and the gap between innovation hype and commercial reality.

Citadel reduced its Sandisk position by 97%, trimming nearly 2 million shares. Simultaneously, the firm initiated a position in D-Wave Quantum. While neither trade involved massive capital allocation, these moves from a fund with Ken Griffin’s track record warrant careful examination. They reveal competing forces reshaping the technology sector: the cyclical boom-and-bust of established industries versus the speculative fever surrounding emerging technologies.

The Semiconductor Windfall: Understanding Sandisk’s Spectacular Run

Sandisk has witnessed a stunning 1,050% surge since its February 2025 spin-off from Western Digital, riding the unprecedented shortage of memory chips triggered by artificial intelligence infrastructure demand. The company develops NAND flash memory storage solutions for everything from personal computers and smartphones to enterprise data centers.

What makes Sandisk’s business model particularly resilient is its vertically integrated approach. Through a joint venture with Japanese manufacturer Kioxia, the company doesn’t merely design chips—it manufactures memory wafers, packages components, and integrates them into final products like solid state drives. This end-to-end control enables optimization in performance and reliability that less integrated competitors cannot match. The partnership also distributes R&D and capital expenditure costs across a larger revenue base, improving margins.

Current market conditions favor Sandisk dramatically. The company expects adjusted earnings to jump 160% in Q2 2026 despite non-GAAP earnings falling 33% in the prior quarter, reflecting the severity of the supply crunch. Wall Street analysts project adjusted earnings will compound at 259% annually through fiscal 2027. Under conventional valuation frameworks, a current P/E of 170 times earnings might appear justified given this explosive growth trajectory. Supply analysts generally project the shortage persists through 2026, suggesting several quarters of tailwinds ahead.

However, Ken Griffin’s decision to exit reflects a crucial insight often overlooked: the semiconductor industry operates in brutal cycles. When supply catches up with demand—and history suggests it always does—pricing power evaporates almost overnight. Yesterday’s premium valuations collapse as customers revert to competitive bidding. That cyclical reality explains why Ken Griffin reduced exposure. He appears positioned to capture the current shortage-driven premium while avoiding the sharp downside correction when market dynamics reverse.

The Quantum Dream at Bubble Valuations

D-Wave Quantum presents a starkly different investment case. The company has climbed 1,900% since January 2023, becoming the poster child for the quantum computing enthusiasm sweeping institutional portfolios. D-Wave commercialized quantum computers in 2011 and launched cloud-based quantum services in 2018—first-mover advantages that positioned the firm ahead of pure-play competitors.

The company develops superconducting quantum computing systems, including quantum annealers designed for optimization problems and gate-based machines capable of running any quantum algorithm. Annealers currently scale more readily due to lower error sensitivity, explaining D-Wave’s focus on this architecture as a near-term revenue source. CEO Alan Baratz emphasizes that D-Wave systems already solve problems beyond the scope of advanced supercomputers, a claim that is technically accurate but potentially misleading about practical near-term applications.

Here’s where Ken Griffin’s small D-Wave position likely reflects shrewd momentum-trading rather than fundamental conviction: The company trades at 347 times sales—an absurdly expensive valuation even assuming 70% annual sales growth through 2027. Market research suggests quantum computing sales will total just $4 billion by 2030, roughly 100 times smaller than the AI market at $390 billion today. That dramatic scale gap matters enormously for a company valued as if quantum computing represents an imminent market revolution.

Most enterprises won’t benefit from D-Wave technology for years. The quantum computing timeline remains measured in development phases, not commercial quarters. Yet the stock price has soared on momentum and fear-of-missing-out dynamics familiar to anyone who witnessed previous tech bubbles. Ken Griffin’s decision to buy appears tactical—a calculated position to ride speculative fervor—not a bet reflecting lasting conviction in the company’s fundamental trajectory.

What Ken Griffin’s Moves Reveal About Market Timing

These contrasting trades illuminate a crucial investment principle: Ken Griffin recognized that Sandisk’s extraordinary gains reflected finite supply dynamics destined to normalize, while D-Wave’s surge stemmed from speculative excess disconnected from near-term commercial reality. The former justified exit ahead of cyclical reversal; the latter warranted only a small speculative position.

For most investors, the takeaway transcends these two specific stocks. The broader lesson concerns distinguishing between genuine market dislocations (like the current memory chip shortage driving real earnings growth) and bubble territories where prices have untethered from fundamentals (like quantum computing valuations anticipating commercialization years away). Ken Griffin’s portfolio maneuvers suggest that experienced capital allocators remain alert to this distinction, even as market enthusiasm blurs those boundaries.

The semiconductor cycle will turn; that’s not a prediction but market history. D-Wave’s technology will eventually mature into commercial products; the question is whether the company’s current valuation can survive the reality check that maturation demands. Ken Griffin’s portfolio evolution, while small in absolute terms, reflects the wisdom of recognizing when to capture cyclical peaks and when to dabble in speculative momentum before others inevitably discover the gaps between hype and substance.