David Tepper: A Wall Street Legend
David Tepper has developed quite a following on Wall Street. The billionaire heads up Appaloosa Management — the hedge fund he founded back in 1993. He has been called “arguably the greatest hedge fund manager of his generation” by Forbes magazine and has “consistently outperformed his industry peers and the broader global markets since [Appaloosa’s] inception,” according to Carnegie Mellon University.
The results speak for themselves. Over the past three years, Appaloosa has outperformed the S&P 500 by nearly 17%, a remarkable accomplishment considering the macroeconomic downturn that plagued investors during 2022. Given his robust results, Tepper’s stock picks might be worthy of additional review.
Appaloosa’s portfolio is heavily weighted toward artificial intelligence (AI) stocks, with just five companies representing more than 46% of the fund’s holdings to close out the fourth quarter:
– Meta Platforms (NASDAQ: META): 11.6%
– Microsoft (NASDAQ: MSFT): 11.3%
– Amazon (NASDAQ: AMZN): 10.6%
– Nvidia (NASDAQ: NVDA): 6.9%
– Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG): 5.7%
Keep in mind that hedge funds only report their holdings at the end of each quarter, and while these five stocks combined are largely unchanged compared to the third quarter, there’s been a big shakeup among the holdings.
1. Meta Platforms
Meta Platforms continues to be Tepper’s top holding, largely unchanged since the prior quarter. The company’s history of using AI to surface relevant content for users on its social media sites is well documented. Furthermore, as the world’s second-largest digital advertising platform, Meta makes the lion’s share of its revenue from targeted advertising — which is more effective when assisted by AI.
2. Microsoft
Recognizing the vast opportunity ahead, Microsoft was quick to integrate generative AI capabilities into its widely used workplace productivity tools and cloud infrastructure platform.
3. Amazon
Amazon has a trifecta of successful businesses, including its industry-leading e-commerce and cloud infrastructure operations, as well as the company’s No. 3 digital advertising platform.
4. Nvidia
Nvidia is arguably the poster child for the AI revolution, as its graphics processing units (GPUs) are the gold standard not only for gaming, but also for data centers, speeding information through the ether.
5. Alphabet
Alphabet’s Google Search acts as a funnel to fuel the company’s industry-leading digital advertising business, which is also fueled by AI.
In conclusion, David Tepper’s strategic investment in AI stocks has proven to be successful, outperforming the market consistently over the years. His keen eye for emerging technologies and innovative companies has led to impressive returns for his hedge fund. As Tepper continues to navigate the ever-changing landscape of Wall Street, investors remain eager to see what moves he will make next.
