David Tepper is not just a random billionaire who manages a huge fund and has bigger opinions. He is one of those rare players on Wall Street whose portfolio movements can sway the market. He is admired for transforming disasters into moneymaking opportunities, the most notable instance being the 2008 financial meltdown.
David Tepper has gradually built a record and history on the basis of his contrarian instincts, perfect timing, and a rare skill for telling when the market is very scared. And once again he has made a move that is a cause for analysts’ discussion.
In the last quarter, Tepper, without making noise, departed from his long possession in Intel and Oracle. However, rather than putting that capital into the common tech safe havens, he took a stronger position on what he thinks is the future, which is the AI infrastructure.
He set up a large position in AMD and greatly increased his shares in Nvidia, thus indicating where he sees growth for the next decade. Let’s understand what Tepper’s actions tell us, and what retail investors can learn from his strategic shift.
The fate of Intel seems like a loop, with promises of turnaround, an increase in capex, loss of market share, and very slow execution. While the firm is attempting to reposition itself as a foundry giant, this change is both costly and unpredictable.
The once desired position of Intel in data centers as well as personal computers for the public has been gradually given up to quicker and more agile competitors like AMD. The question for an investor like Tepper is that is Intel cheap for a reason? And, if the answer is leaning toward yes, then any investor would not wait for it.
Oracle is certainly not a failing company, it is rather quite the contrary. The demand for its cloud services and AI-stimulating database tools has surged and contributed significantly to the stock during the last two years.
But with valuation issues looming large, increasing debt levels, and the need for more capital expenditures, along with rising inflation to be able to support the AI infrastructure, Tepper must have seen it as the right moment to cash out his profits. For a focused investor like him, it is essential to allocate the capital to places where the growth is not only possible but also explosive.
Tepper’s very recent $154 million investment in AMD is already 2% of Appaloosa’s portfolio, and the timing couldn’t be better. The global sales of computer chips are predicted to reach $1 trillion by 2030, and AMD’s importance in the fields of GPU and data center computing is rapidly increasing.
Recent trends have helped to strengthen the faith in the company. Revenue from data centers went up by 22% year over year reaching $4.3 billion. AMD is exploring new areas in the MI300, MI325, and MI350 series of chips with the hyperscalers.
AMD has new multi-year GPU supply contracts with Oracle and OpenAI. The MI400 roadmap puts AMD up against Nvidia as the only real challenger in AI acceleration. Tepper is not one to jump on the bandwagon, he is actually getting in early for a multiyear GPU arms race that has just begun.
The portfolio of Appaloosa now contains Nvidia shares amounting to 4.8%, and this ratio says a lot. Regardless of the concerns over a potential AI bubble, the company will still remain the king in the fundamentals sector.
Revenues from the datacenter are +66% YoY, reaching $51.2 billion. $150B orders are fulfilled, and + $350B to be shipped by 2026. There are major new partnerships with Humain and Anthropic. Long-term TAM is $3–$4 trillion annually by 2030 for AI infrastructure. Tepper is signaling that volatility in the short term doesn’t shake the long term.
Although it is not necessary for one to replicate Tepper’s every move, his tactic offers a guideline for the AI hype market. Artificial Intelligence is still the major technological trend and the main market in the decade at the same time. The GPUs, data centers, and accelerated computing are not some trends, rather they are the basis of the new technology to come.
Nvidia is on a 44.6x earnings bubble. AMD is on a 105.9x earnings bubble. This is not particularly cheap, but it suggests that the future upswing is partly factored in. Investors who believe in the AI future should not try to guess the market, instead they should slowly build during the downturns to reduce the effect of the volatility.
David Tepper isn’t venturing into the world of hype; he’s venturing into the world of its infrastructure. His move from Intel and Oracle to AMD and Nvidia only emphasizes a strong belief that the AI revolution will be driven by computing power, and that power will be delivered by those who can innovate the quickest.
Retail investors do not need the instincts of billionaires, but they can benefit from the positioning of billionaires. And, at this point, the direction of the smart money is toward the engines that are going to drive the future of AI.
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