David Tepper cut Micron by 41%, dumped Sandisk entirely and is now betting against Apple with $242 million in put options

David Tepper knows something about timing market cycles. The founder of Appaloosa Management built one of the most celebrated records in hedge fund history, generating annualized returns of approximately 25% through mid-2019, and has continued producing extraordinary results since, with Appaloosa delivering a 32% gross return in just the first half of 2026.

So when Tepper cuts two of the hottest stocks in the market and places a $242 million bet against one of their biggest customers, it is worth paying attention.

Appaloosa's second-quarter 13F filing, submitted to the SEC approximately 45 days after the quarter ended, revealed that Tepper cut his Micron Technology stake by 41%, sold his entire position in Sandisk and purchased put options on Apple worth $242 million at quarter-end. The combination of moves points to a manager who believes the memory chip supercycle, which has been one of the most powerful investment themes of the past two years, may be approaching its peak.

A long relationship with Micron, now trimmed

Tepper has been a Micron investor since late 2016, holding the memory chip maker through multiple boom-and-bust cycles and making it his portfolio's largest single position on several occasions. As recently as the fourth quarter of last year, he added one million shares to his position alongside call options controlling an additional 250,000 shares, then added more in the first quarter of 2026.

The 41% reduction in the second quarter was therefore a significant reversal. Even after the cut, Micron remained Appaloosa's second largest position at approximately 15% of the publicly traded equity portfolio. But the stock had accounted for as much as 29% of the portfolio in the past, and the reduction signals Tepper sees the risk-reward balance shifting.

Sandisk: a complete exit

The Sandisk position, which had represented approximately 3% of the portfolio at the end of the first quarter, disappeared entirely from the second-quarter filing. Sandisk, which spun off from Western Digital and listed independently, has been one of the biggest beneficiaries of surging memory demand from AI data center buildouts. Tepper's full exit suggests he views that tailwind as largely priced in.

Both Micron and Sandisk have benefited from a structural dynamic: AI data center construction has driven memory demand sharply higher while foundry capacity constraints have kept supply tight, allowing prices and profits to surge. But memory markets are historically among the most cyclical in semiconductors. High demand prompts manufacturers to build new production capacity, which typically results in oversupply several years later. Meanwhile, chip demand has historically been cyclical too, and when supply gluts meet weakening demand, prices and profits fall sharply.

The Apple put: a $242 million bet

The most intriguing disclosure in the filing is Tepper's purchase of put options on Apple, giving Appaloosa the right to sell 835,000 Apple shares. At the quarter-end price, the position was worth approximately $242 million, just over 3% of the portfolio.

The Apple hedge connects directly to the memory thesis. Apple uses chips from both Micron and Sandisk in its consumer devices for short-term memory and long-term storage. During Apple's third-quarter earnings call, outgoing chief executive Tim Cook noted that rising memory prices would continue to pressure the company's gross margin in coming quarters, confirming that higher chip costs flow directly through to Apple's profitability.

Apple's valuation has also stretched. Investors have rotated into the stock as a perceived safe harbor amid concerns that hyperscalers are overspending on AI infrastructure, pushing Apple to 36 times forward earnings. The company has avoided building massive data centers, keeping capital expenditure far lower than the hyperscalers, which has supported its cash flow. But a 36 times forward earnings multiple is high for a company growing at a fraction of the pace of the chipmakers or AI platform companies.

It is worth noting that 13F filings do not disclose short positions. Tepper's Apple puts may form only one leg of a more complex trade that is overall neutral or even bullish on the stock. Without visibility into Appaloosa's full book, the puts alone cannot be read as a straightforward bearish call.

Tepper's second-quarter moves collectively tell a story of a manager taking profits on one of the most crowded and consensus-driven investment themes in the market and repositioning toward more selective exposure. Whether the memory supercycle has actually peaked will only become clear in hindsight. But when one of the world's great cycle traders starts reducing his chips exposure, it tends to be worth noticing.