How Citadel's Ken Griffin Is Playing Two Opposite Market Bets: Dumping Sandisk While Loading Up on D-Wave Quantum

When one of history’s most profitable hedge funds makes major portfolio adjustments, the market pays attention. In the third quarter, Citadel Advisors—the legendary institution built by Ken Griffin—made exactly those kinds of moves: divesting nearly 2 million shares of Sandisk while simultaneously taking a stake in D-Wave Quantum. Neither position is particularly large relative to Citadel’s overall assets, but the strategic contrast reveals something important about how sophisticated investors are reading the current market landscape. Citadel meaning extends beyond just managing money; it represents institutional wisdom about identifying inflection points in fast-moving industries.

The decisions tell a story about industry maturity and cycle timing. Sandisk, despite posting eye-popping stock gains of 1,050% since its February 2025 spinoff from Western Digital, represents a mature semiconductor play facing predictable cyclical pressures. D-Wave Quantum, which has surged 1,900% since January 2023, represents a speculative technology bet that has entered bubble valuations. By reducing one and adding the other, Citadel’s leadership appears to be executing a sophisticated risk-management play that other investors should understand.

Why the Most Profitable Hedge Fund’s Latest Moves Matter to Your Portfolio

Citadel Advisors holds a unique position in global finance. The firm has generated more cumulative profits than any hedge fund in history, which means its investment decisions often function as a canary in the coal mine for market conditions. Ken Griffin founded the firm on the principle of identifying market inefficiencies and pricing dislocations—precisely the kind of moment we appear to be in for both semiconductor and quantum computing stocks.

What makes Citadel’s Q3 activity particularly instructive is the directional contradiction within it. Most investors chase momentum in both directions simultaneously. Instead, Citadel demonstrates portfolio discipline: exiting a winner that faces structural headwinds while taking a calculated position in an emerging sector. This kind of simultaneously profitable and risk-aware positioning is how elite institutional investors maintain edge through market cycles.

Sandisk’s Soaring Stock Hides a Cyclical Industry Risk: Why Citadel Is Exiting

Sandisk has experienced a dramatic resurgence because memory chip supply has become critically constrained by insatiable demand for artificial intelligence infrastructure. The company manufactures NAND flash memory-based storage solutions for both edge computing devices and data centers, operating through a strategic joint venture with Japanese manufacturer Kioxia that provides crucial cost efficiencies and supply chain resilience.

The company’s vertically integrated model—where Sandisk manufactures memory wafers, packages them, and integrates chips into finished products like solid-state drives—gives it genuine competitive advantages. Unlike fragmented competitors, Sandisk can optimize product performance and reliability across its entire value chain. These advantages have been particularly visible in recent quarters, with Wall Street expecting adjusted earnings to jump 160% in Q2 on the back of unprecedented supply constraints.

However, this is precisely where Citadel’s decision to sell makes strategic sense. The semiconductor industry operates in well-documented cycles, and the current supply shortage almost certainly represents a peak demand scenario rather than a new normal. Industry analysts generally expect supply constraints to persist through 2026, which will support several more quarters of strong pricing power and margins. But that supply recovery—when it arrives—will be swift and brutal.

When memory chip supply finally normalizes, Sandisk will rapidly lose the pricing power it currently enjoys. Customers will shift to whatever supplier offers the lowest cost rather than accepting scarcity premiums. The market will almost certainly compress valuation multiples dramatically when this transition begins. Currently trading at 170 times forward earnings based on elevated demand assumptions, Sandisk could face sharp share price declines once the cycle begins rotating downward. Citadel’s exit ahead of this foreseeable inflection point demonstrates disciplined cycle management.

D-Wave’s Quantum Promise: A Small Bet on Moonshot Technology with Bubble Valuations

In the opposite corner, Citadel acquired a small stake in D-Wave Quantum, a company that has successfully pioneered quantum computing commercialization. D-Wave develops superconducting quantum computing systems, having become the first company to commercialize quantum computers in 2011 and the first to offer cloud-based quantum services in 2018. The company focuses on quantum annealers (systems designed for optimization problems) alongside gate-based universal quantum computers, which can theoretically run any quantum algorithm.

This technological diversification matters. While gate-based universal systems will ultimately solve broader classes of problems, they remain highly sensitive to computational errors and prove difficult to scale. Quantum annealers, by contrast, scale more easily because they tolerate higher error rates. D-Wave’s focus on annealers as a near-term revenue stream while developing universal systems for long-term potential gives the company a genuine first-mover advantage and ongoing customer relationships.

The company’s competitive position is further strengthened by the fact that D-Wave is the only quantum company developing both annealing and gate-based systems. This dual approach should allow D-Wave to monetize near-term quantum services while funding longer-term universal system development. CEO Alan Baratz has articulated this strategy clearly: D-Wave systems can already solve certain optimization problems beyond the capability of the world’s most advanced supercomputers.

Yet this is where valuation reality collides with technological promise. Grand View Research estimates the total quantum computing market will reach only $4 billion by 2030—approximately 100 times smaller than the artificial intelligence market is today. Most enterprises will have no practical use for quantum computing for years. Despite this runway being measured in years rather than quarters, D-Wave currently trades at 347 times sales revenue. That valuation is absurdly expensive even accounting for analyst expectations of 70% annual sales growth through 2027.

Citadel’s acquisition of D-Wave stock appears calculated and limited in scope. Rather than a long-term conviction bet, this position seems designed to capture momentum in what has clearly become speculative bubble territory. The firm is essentially playing the technical continuation of a momentum move while the semiconductor bet represents disciplined cycle-aware risk management. Both moves reflect institutional sophistication: know when to harvest a mature cycle and when to ride momentum in emerging sectors, while maintaining appropriate position sizing for actual conviction levels.

What Citadel’s Strategic Shift Reveals About Market Timing and Risk Management

The contrast between Citadel’s Sandisk exit and D-Wave entry illuminates a broader investment philosophy. Most individual investors struggle with cycle timing, either holding winning positions too long or exiting winners prematurely. Elite institutional investors like those managing Citadel’s capital operate with more systematic frameworks for identifying inflection points.

The Sandisk decision highlights the reality that semiconductor cycles are predictable and dangerous. Extraordinary profits generate capacity additions, which eventually create supply that destroys pricing power and margins. The current supply shortage supporting Sandisk’s 1,050% gain will inevitably normalize, and investors holding into that normalization face severe drawdowns. Citadel’s early exit reflects the discipline to harvest profits before structural headwinds arrive.

The D-Wave decision simultaneously recognizes that emerging technologies can generate spectacular momentum moves even when real-world applications remain years away. Rather than dismissing the move as pure speculation, Citadel takes a calculated small position recognizing that bubbles often persist longer than rational investors expect. This is not a bet on quantum computing revolutionizing computing in 2026 or 2027. It is a tactical bet on continued momentum for a momentum-driven asset class.

For individual investors evaluating both opportunities, the lesson is about humility regarding market timing and proportionality in position sizing. Sandisk offers meaningful semiconductor exposure but faces cyclical headwinds that should prompt caution on new purchases. D-Wave offers potential to participate in an emerging technology sector but at valuations that make cautious scaling into positions prudent rather than aggressive buying. Citadel’s positioning—exiting one fully, adding a small allocation to the other—represents the kind of balanced, cycle-aware discipline that has made it the most profitable hedge fund in history. Understanding those investment principles matters more than attempting to replicate the trades themselves.