David Tepper Boosts Nvidia Stake by 533%, Exits AI Stock

Basio badr

ago 60 minutes

David Tepper, the billionaire founder of Appaloosa Management, has made significant moves in the stock market regarding Nvidia and Oracle. His decisions reflect a keen interest in the evolving landscape of artificial intelligence (AI).

David Tepper Boosts Nvidia Stake by 533%

In a notable shift, David Tepper increased his stake in Nvidia by 533% over two quarters. This substantial leap comes after he drastically reduced his holdings from a stock-split-adjusted 10.2 million shares to just 300,000 shares earlier this year.

Between the second and third quarters of 2023, Tepper acquired a total of 1.9 million shares of Nvidia. This includes 1.45 million shares purchased in the June-ended quarter and an additional 150,000 shares in the September-ended quarter. As of September 30, 2023, this represents a significant reinvestment in one of the hottest stocks on Wall Street.

Nvidia’s Market Position

Nvidia, known for its powerful graphics processing units (GPUs), has experienced an exceptional demand surge driven by its advancements in AI technology. The company’s Hopper (H100), Blackwell, and Blackwell Ultra GPUs are in high demand, enabling Nvidia to maintain a gross profit margin exceeding 70%.

Moreover, Nvidia’s CUDA software platform serves as a foundational tool for developers, further solidifying customer loyalty and ensuring a strong market position.

Tepper Exits AI Stock Oracle

Conversely, Tepper has divested completely from Oracle, an integrated cloud applications and services provider. Appaloosa’s stake in Oracle reached a peak of 2.3 million shares in the first quarter of 2024 but was significantly reduced in the following quarters.

Sold 550,000 shares in the second quarter of 2024.
Jettisoned the remaining 150,000 shares recently.

The decision to exit Oracle likely reflects Tepper’s strategy to lock in profits. Oracle’s share price skyrocketed to approximately $345 at its peak, contributing to a nearly $1 trillion valuation. However, Tepper’s exit could also be linked to Oracle’s missed earnings expectations in three of the last four quarters, which have raised concerns about future performance.

Market Trends and Concerns

The rise of AI-related technology presents both opportunities and challenges. While Nvidia thrives under heightened demand for AI infrastructure, tensions exist due to increased competition and the risk of an AI bubble. The excitement surrounding potential returns must be balanced with caution regarding the sustainability of these aggressive valuations.

In conclusion, Tepper’s recent investment movements underscore the dynamic nature of the tech stock market, especially within the AI sector. Investors should remain vigilant to trends and performance indicators as the AI landscape continues to evolve.