Situational Awareness Bet Billions on Sandisk Before Imploding. The Supercycle Is Far From Over for SNDK Stock.

Sandisk (SNDK) has been one of the biggest beneficiaries of the artificial intelligence-driven memory boom, and a newly disclosed multibillion-dollar bet from one of the market’s most aggressive AI investors has added another layer to the story. Situational Awareness, the hedge fund founded by former OpenAI researcher Leopold Aschenbrenner, dramatically increased its exposure to SanDisk before the fund nearly collapsed during July’s violent selloff in AI-related stocks.

The disclosure is striking because Sandisk had become Situational Awareness’s largest holding just before the downturn. The fund had built its reputation on high-conviction bets on companies positioned at the forefront of the AI revolution, using leverage to magnify returns along the way. That strategy produced extraordinary gains while the AI trade was surging, but it worked just as powerfully in reverse when memory and semiconductor stocks tumbled, eventually forcing the fund to start liquidating positions to meet margin calls.

The bigger question is what the episode says about both Sandisk and the broader AI trade. Let’s take a closer look.

About Sandisk Stock

Sandisk Corporation is a leading developer and manufacturer of data storage devices and solutions based on NAND flash technology. The company was spun off from hard-drive manufacturer Western Digital (WDC) last year. It offers products such as solid-state drives (SSDs), removable memory cards (SD, microSD, CompactFlash), USB flash drives, and embedded storage for mobile and automotive applications. Sandisk’s storage chips, known as NAND flash memory, have become increasingly vital in AI data centers and consumer devices, fueling unprecedented growth for the company. SNDK’s market cap currently stands at $83.5 billion.

Shares of the memory supplier have soared 572% year-to-date (YTD). SNDK stock rebounded alongside other memory stocks after Citadel’s deal to acquire most of Situational Awareness’s public equity holdings sparked a rally across the AI trade. It has come under pressure this week, however, as elevated long-term bond yields weighed on AI-related names.

Situational Awareness Loaded Up on Sandisk Before the Memory Stock Rout

Situational Awareness made a massive bet on memory-card maker Sandisk just before the AI trade faced a reality check. According to the hedge fund’s latest 13F filing, it held about 2.5 million shares of SNDK valued at more than $5.6 billion as of June 30, up from roughly 1.1 million shares worth $724.4 million at the end of the first quarter. The increase made SNDK the fund’s largest holding. 

Situational Awareness was founded in 2024 by former OpenAI researcher Leopold Aschenbrenner. The hedge fund took its name from Aschenbrenner’s 165-page 2024 white paper, “Situational Awareness,” which warned of the risks posed by the technology race and the extraordinary speed at which it could unfold. The fund has been investing in companies it views as being at the forefront of the AI revolution.

Before its collapse, Situational Awareness had delivered phenomenal returns of more than 1,000% since its launch in 2024. The value of the fund’s assets peaked at $45 billion in early July. Aschenbrenner made his conviction in the AI boom clear and used leverage to amplify returns. 

However, as the AI trade—and particularly the memory trade—began to unravel in July, Aschenbrenner’s approach turned against him. AI-related stocks cratered as concerns mounted over whether their lofty valuations could be sustained. SNDK stock tumbled 47% for the month, while Micron Technology (MU), another of Aschenbrenner’s largest holdings, sank 29%. Amid the selloff, Situational Awareness’s assets shrank to about $10 billion as the fund was forced to liquidate public equity positions to meet margin calls, according to Bloomberg.

Aschenbrenner’s use of leverage ultimately pushed Situational Awareness to the brink of collapse. The fund was forced to negotiate a bailout deal with Ken Griffin’s Citadel. A separate Bloomberg report said Citadel bought most of Situational Awareness’s public equity investments at a 10% discount in a deal struck just before the market opened on Thursday, July 30.

Citadel’s Rescue Deal Helps Fuel AI Trade Rebound

News of the Citadel deal helped spark a relief rally in AI stocks. On July 30, the Philadelphia Semiconductor Index ($SOX), a closely watched U.S. benchmark for major semiconductor stocks, posted its biggest gain since April 2025. The rally spilled over into Asia the following day, with South Korea’s Kospi Index surging a record 18% and Japan’s Nikkei 225 climbing 4%.

Some market participants attributed part of July’s rout in AI stocks to Situational Awareness’s forced liquidation of its investments. Indeed, when a leveraged fund is forced to unwind large positions quickly to meet margin calls, the resulting wave of selling can push share prices sharply lower, particularly in crowded trades. Those declines can then trigger further selling by other leveraged investors, potentially amplifying the initial move.

Last month’s chip selloff began as healthy profit-taking after a near-parabolic rally but quickly spiraled into a broader rout, fueled by concerns ranging from potential overcapacity following Meta Platforms’ (META) plan to sell computing capacity to escalating tensions in the Middle East and growing competition from China. Situational Awareness’s forced liquidations added another layer of pressure. Since Sandisk and Micron accounted for more than half of the fund’s portfolio before July’s rout, it is reasonable to assume those positions bore the brunt of the selling as the fund scrambled to meet margin calls. 

Citadel’s move to buy most of Situational Awareness’s remaining public-equity holdings effectively halted the leverage unwind. Combined with lighter positioning and cheaper valuations, that encouraged dip buyers to step in and helped fuel a new leg higher, with SOX posting eight positive sessions between July 30 and Aug. 14. However, chipmakers have come under pressure again this week as elevated long-term bond yields weighed on the sector.

What Situational Awareness’s Sandisk Bet Means for SNDK Investors

Situational Awareness’s massive bet on Sandisk reflected the hedge fund’s conviction that the current memory supercycle is far from over. Tight supply of memory—a foundational component of AI computing—has driven prices sharply higher and fueled the company’s rise. With little sign that memory chip prices are set to stop climbing, Sandisk is well positioned to continue benefiting from the AI boom.

At its 2026 Investor Day last week, Sandisk said it expects revenue to grow at a mid- to high-teens annual rate between fiscal 2028 and fiscal 2030. It also projected adjusted gross margins to stabilize at around 80% over that period. In addition, the company said long-term agreements are “quickly becoming its predominant way of doing business.”

Like peers such as Micron Technology, Sandisk is increasingly turning to multiyear agreements that lock in customers and pricing over the longer term. Because of the boom-and-bust cycles that have traditionally defined the memory industry, Sandisk and its peers have historically traded at relatively low forward price-to-earnings (P/E) multiples. Sandisk currently trades at a forward P/E multiple of only 7.57x. With that, the shift toward long-term agreements reduces demand volatility and helps create a more stable earnings profile, which could convince the market to assign the company a higher P/E multiple.

J.P. Morgan analyst Harlan Sur resumed coverage of Sandisk with an “Overweight” rating and a $2,250 price target following the company’s investor day. Sur said the company is “uniquely positioned” to capitalize on the ongoing structural shift in NAND flash memory demand, fueled by “rapid growth in AI inference.” Other Wall Street analysts are overwhelmingly bullish on SNDK as well, giving the stock a consensus “Strong Buy” rating. The average price target for SNDK stock stands at $2,115.17, indicating 34% upside potential from current levels.