Billionaire David Tepper Shifts Focus to AI Infrastructure, Sells Intel and Oracle

Billionaire David Tepper is making significant shifts in his investment strategy, focusing on AI infrastructure. His hedge fund, Appaloosa Management, has recently divested holdings in major firms Intel and Oracle, signaling noteworthy changes in his portfolio for the third quarter of 2023.

Investment Moves by David Tepper

David Tepper, a renowned figure on Wall Street, is known for his keen ability to spot high-potential investments, especially during market fluctuations. His firm, Appaloosa Management, typically files quarterly information with the U.S. Securities and Exchange Commission (SEC), detailing significant changes in its portfolio.

Exiting Intel and Oracle

• Tepper’s fund has sold off shares in Intel and Oracle this quarter.
• Intel’s recent struggles continue as it attempts to make a turnaround.
• Oracle has enjoyed a strong share price but faces hurdles due to high debt and future capital expenditure concerns.

Despite Intel’s attempts to regain competitiveness, it has lost market share to competitors like AMD. This slow transition may have prompted Tepper to reassess its long-term potential. Similarly, while Oracle has performed well, concerns about future profitability may have influenced Tepper’s decision to reallocate his capital.

Investment in AI Infrastructure Companies

In place of his Intel and Oracle stakes, Tepper has significantly invested in AI infrastructure. He has built a $154 million position in AMD, which represents nearly 2% of Appaloosa’s portfolio. Furthermore, Tepper has increased his stake in Nvidia, now constituting about 4.8% of his overall holdings.

Market Trends and Projections

• Global semiconductor sales are projected to reach $1 trillion by 2030.
• AMD benefits from rising demand for its GPU series, which has seen data center revenues rise 22% year-over-year.
• Nvidia’s data center revenues grew 66% year-over-year, indicating strong market demand.

AMD’s MI300 series and upcoming MI400 GPUs are poised for growth, while Nvidia continues to expand its market share in AI infrastructure. This might be why Tepper is betting on these companies, despite uncertainties regarding the AI market bubble.

Outlook for Investors

Investors observing Tepper’s recent moves may want to consider both Nvidia and AMD for potential long-term gains in the burgeoning AI sector. While these stocks have appreciated significantly, their high valuations might suggest that future growth is already baked into their prices.

As the AI infrastructure market continues to evolve, a disciplined investment approach, such as dollar-cost averaging, could allow investors to build positions in these high-growth stocks over time.