Billionaire David Tepper dumped Intel and Oracle last quarter and snapped up these AI infrastructure stocks
Tepper’s recent picks signal some of the most sustainable and high-potential opportunities in AI infrastructure.
Appaloosa Management founder David Tepper has long been known for his impressive and consistent returns on Wall Street. The billionaire investor and prominent hedge fund manager has built a reputation for investing in distressed debt and high-value stocks by taking stakes in companies whose debt or stock prices have been negatively affected by excessive investor fears.
Thanks to his exceptional investment instincts and ability to find opportunities in times of market stress, he has made billions in profits. Tepper’s trading in troubled bank stocks during the 2008 financial crisis positioned him as a “master of contrarian investing.”
It is therefore no surprise that Appaloosa Management’s withdrawal from corporate giants Intel (INTC +7.92%) And Oracle (ORCL +1.81%) in the third quarter raised eyebrows. Instead, the fund chose a new position in an artificial intelligence (AI) infrastructure player. Advanced microdevices (AMD +1.34%) and significantly increased its stake in Nvidia (NVDA +2.10%).
The billionaire investor appears to be profiting from fears surrounding a potential AI bubble. Here’s what more we can learn from these moves.
Image source: Getty Images.
Sale of Intel and Oracle
Like all investment managers overseeing portfolios over $100 million, Appaloosa files a quarterly Form 13F with the U.S. Securities and Exchange Commission (SEC). While these documents do not reveal Tepper’s true investment logic or strategy, they do give investors insight into the securities he accumulated or abandoned at the end of the fiscal quarter.
Tepper has provided no public explanation for his individual stock decisions. However, based on his overall investment strategy, we can infer his motivations for leaving Intel and Oracle.
Today’s change
(7.92%) $3.17
Current price
$43.18
Key Data Points
Market capitalization
$191 billion
Daily scope
$40.06 -$43.34
52 week range
$17.66 -$43.34
Volume
1.7M
Average flight
110m
Gross margin
35.58%
Dividend yield
N / A
Although Intel has been working on its foundry-focused turnaround over the past two years, that transition has been slow and capital-intensive. The company also lost market share to AMD in the data center and PC markets. Even though Intel’s valuation is cheap, it no longer seems to fit Tepper’s investment style. The legendary investor believes that even a cheap company without strong growth catalysts can continue to lose value.
On the other hand, Appaloosa may have preferred to book profits on Oracle because its stock price has already seen strong gains, supported by exceptional demand for its cloud and AI database offerings. However, the stock gave back some of its gains due to concerns over future investment needs, high debt and high valuation.
Therefore, while Oracle is not a bad investment, Tepper may have sold it to free up capital to select other high-growth opportunities. Its concentrated investment strategy also aligns with this thesis.
Investing in AI infrastructure stocks
Tepper acquired a nearly $154 million stake in AMD, representing nearly 2% of Appaloosa Management’s total portfolio. With global semiconductor sales estimated to reach $1 trillion by 2030 and AMD being the only major GPU supplier besides Nvidia in the AI market, the company is well-positioned to grow rapidly in a market hungry for additional computing capacity.
Today’s change
(1.34%) $2.95
Current price
$222.71
Key Data Points
Market capitalization
$358 billion
Daily scope
$219.80 -$225.97
52 week range
$76.48 -$267.08
Volume
467 KB
Average flight
59M
Gross margin
44.33%
Dividend yield
N / A
AMD is already seeing strong demand for its MI300, MI325, and MI350 GPU series as well as its server processors from hyperscalers and large enterprises. In the third quarter, the company’s data center revenue increased 22% year over year to $4.3 billion. Coupled with the impressive roadmap for its upcoming high-performance, cost-effective MI400 GPU series, which includes multi-year supply partnerships with Oracle and OpenAI, Tepper appears even more confident about this stock’s long-term growth potential.
Tepper also added nearly 150,000 shares of Nvidia, which now represents about 4.8% of Appaloosa’s total portfolio. Nvidia remains the backbone of continued AI infrastructure development, with data center revenue growing 66% year-over-year to $51.2 billion in the third quarter (ended October 26).
Today’s change
(2.10%) $3.77
Current price
$183.69
Key Data Points
Market capitalization
4372 billion dollars
Daily scope
$181.58 -$185.63
52 week range
$86.62 -$212.19
Volume
1.9M
Average flight
192M
Gross margin
70.05%
Dividend yield
0.02%
Management reiterated that Nvidia has already shipped $150 billion worth of orders for Blackwell and Rubin systems, while the remaining $350 billion in orders are expected to be shipped by the end of calendar year 2026. The company’s recent deals with Humain, a subsidiary of Saudi Arabia’s Public Investment Fund, and with Anthropic further expand the company’s opportunities beyond $500 billion.
With the company well-positioned to capture a significant portion of the $3-4 trillion annual AI infrastructure opportunity by 2030, Tepper appears to be willing to tolerate short-term volatility due to AI’s fears for substantial long-term gains.
What should investors do now?
Even though investors prefer not to copy Tepper’s trades, especially amid fears of a potential AI bubble, they can keep an eye on these stocks if they believe in the long-term AI scenario.
Nvidia and AMD continue to benefit from the explosive demand for computing capacity. However, Nvidia trades at 44.6 times earnings, while AMD trades at 105.9 times earnings. The high valuation implies that part of the future upside is already taken into account.
So it makes sense for retail investors to opt for a dollar-cost averaging strategy and gradually build a substantial position in these two AI stocks.
