Billionaire Stanley Druckenmiller Sells Sandisk Stock and Buys an AI Stock Wall Street Says Is Deeply Undervalued
Billionaire Stanley Druckenmiller Sells Sandisk Stock and Buys an AI Stock Wall Street Says Is Deeply Undervalued
Trevor Jennewine, The Motley FoolMon, April 6, 2026 at 8:04 AM UTC
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Key Points -
In the fourth quarter, billionaire Stanley Druckenmiller sold his position in Sandisk and more than tripled his stake in Google-parent Alphabet.
Sandisk is gaining market share in NAND flash memory and Wall Street expects adjusted earnings to increase at 73% annually through fiscal 2029.
Alphabet has successfully adapted to the generative AI search era, and it is gaining market share in cloud services because of proprietary models and custom chips.
10 stocks we like better than Sandisk ›
Billionaire Stanley Druckenmiller ran Duquesne Capital Management between 1981 and 2010. The hedge fund returned about 30% annually without a single down year during that period.
Today, Druckenmiller only manages his own money through Duquesne Family Office, and he made some interesting trades in the fourth quarter. He sold his entire stake in Sandisk (NASDAQ: SNDK), and more than tripled his stake in Google-parent Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).
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Interestingly, Wall Street analysts generally think Alphabet is deeply undervalued. The stock has a median target price of $385 per share, according to The Wall Street Journal. That implies 30% upside from its current share price of $295.
Nevertheless, the fourth quarter ended about three months ago, so investors need to revisit the investment thesis for both stocks before copying Druckenmiller's trades. Here are the important details.
A silver bear and bull stand on a stock price chart thats sits on newsprint.
Image source: Getty Images.
Sandisk: The stock Stanley Druckenmiller sold in the fourth quarter
Sandisk is a semiconductor company that develops NAND flash memory chips and storage solutions for data centers and edge devices like personal computers. Core to its growth strategy is a joint venture with Japanese manufacturer Kioxia. The companies benefit from cost efficiencies by splitting R&D expenses and capital expenditures related to manufacturing equipment and wafer fabrication processes.
Sandisk has another key advantage in vertical integration. Beyond manufacturing flash memory wafers, the company packages wafers into chips and assembles chips into final products, like embedded storage devices and enterprise solid state drive (SSDs). That lets Sandisk optimize reliability and performance to a greater degree than suppliers less focused on final products, like Micron Technology.
Compared to hard disk drives (HDDs), SSDs built on NAND flash technology are far more expensive, but they are also faster and more durable, which makes them the better choice for artificial intelligence (AI) workloads. Consequently, Nvidia CEO Jensen Huang believes NAND flash memory will be "the biggest storage market in the world."
Sandisk is the fifth largest supplier of NAND flash memory behind Samsung, SK Hynix, Micron, and Kioxia. But Sandisk gained 2 percentage points of market share in the past year, outpacing the all competitors apart from SK Hynix. That trend could continue in the future because several hyperscalers are evaluating its enterprise SSDs.
Sandisk reported non-GAAP earnings growth of 404% in the most recent quarter, and Wall Street estimates adjusted earnings to increase at 73% annually through the fiscal year ending in June 2029, driven by a widespread shortage in memory chips. That makes the current valuation of 95 times adjusted earnings look tolerable, but certainly not cheap.
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Alphabet: The stock Stanley Druckenmiller bought in the fourth quarter
The investment thesis for Alphabet centers on its strong presence in digital advertising and cloud computing. As the largest ad tech company and third-largest public cloud, Alphabet is primed for strong growth, especially because expertise in artificial intelligence will likely reinforce its competitive edge in those markets.
For instance, while generative AI applications like ChatGPT have dramatically changed the internet search landscape, Alphabet's Google Search has adapted with AI Mode and AI Overviews, features built on its proprietary Gemini models. CEO Sundar Pichai says those features are "driving greater usage."
Meanwhile, Forrester Research recently ranked Google Cloud as the best AI infrastructure solution on the market. Indeed, while the company still trails Amazon and Microsoft in cloud infrastructure and platforms services sales, it is steadily gaining market share because of demand for Gemini models and custom AI chips called tensor processing units (TPUs). Google Cloud revenue growth has accelerated in three consecutive quarters.
Importantly, while TPUs were initially limited to internal use cases, Alphabet now monetizes the chips through external customers. Meta Platforms, Anthropic, and OpenAI have struck deals to rent TPUs, and Meta may deploy TPUs in its own data centers by 2027. Alphabet has also signed an agreement with at least one large investment firm to fund a joint venture that will provide TPU-based cloud services.
Wall Street expects Alphabet's earnings to increase at 15% annually through 2029. That makes the current valuation of 27 times earnings look reasonable. But analysts have regularly underestimated the company. Alphabet beat the consensus earnings estimate by an average of 15% in the last six quarter. If that continues, the current price would be a very attractive entry point for patient investors.
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Trevor Jennewine has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Micron Technology, Microsoft, and Nvidia. The Motley Fool has a disclosure policy.
Source: “AOL Money”
