Want to know what new technology excites billionaire investors the most? Look at their top holdings. For example, artificial intelligence (AI) stocks take six spots among the top 10 investments of billionaire David Tepper's Appaloosa hedge fund.
However, Tepper favors some AI leaders more than others. He just sold three AI stocks but loaded up on Nvidia (NVDA -0.40%).
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Tepper's big Q2 AI moves
Appaloosa's 13F regulatory filing for the second quarter of 2025 revealed several big AI moves. Tepper bought around 1.45 million additional shares of Nvidia in Q2, boosting his stake in the GPU maker by more than 483%. Nvidia now ranks as Appaloosa's seventh largest position.
However, Tepper seemed to sour somewhat on his hedge fund's top holding. He sold roughly 2.16 million shares of Alibaba Group Holding (BABA -1.14%) (BABA -1.14%) in Q2, which reduced Appaloosa's stake by 23.4%. Even after this sale, though, Alibaba remains Tepper's largest holding.
The billionaire slashed his position in Meta Platforms (META -1.19%) by 27.3%. However, Meta still makes up almost 4.6% of Appaloosa's portfolio and is the hedge fund's sixth largest holding.
Tepper also appeared to be less favorable about Google parent Alphabet (GOOG 0.17%) (GOOGL 0.18%). He reduced his hedge fund's position in the search and cloud services giant by roughly 25.4%. Alphabet nonetheless continues to rank among Appaloosa's top 10 holdings, coming in at No. 8.
What's the billionaire's rationale?
Billionaire investors don't always explain the reasoning behind their buys and sells. We can only speculate about Tepper's rationale in buying Nvidia while selling shares of Alibaba, Meta, and Alphabet.
It's a pretty easy guess as to why the hedge fund manager increased Appaloosa's position in Nvidia. The company continues to dominate the AI chip market, with its Blackwell GPUs enjoying strong demand. With several of Nvidia's largest customers mentioning significant investments in expanding their data center capacity, Tepper probably expects the chipmaker's robust growth to continue.
Why did he sell Alibaba? Maybe Tepper felt the stock didn't have as much room to run after soaring so far in 2025. He perhaps also thinks the steep tariffs the Trump administration has imposed on Chinese imports could hurt Alibaba's e-commerce and cloud services customers and ultimately affect Alibaba itself.
Tepper might not like Meta's valuation, with its forward price-to-earnings ratio of 29. While this forward earnings multiple is below Nvidia's, the billionaire probably doesn't think Meta will be able to grow as much as Nvidia.
The sale of Alphabet is more difficult to explain. The stock isn't priced exorbitantly, with shares trading at only around 21 times forward earnings. Tepper might be concerned about Alphabet's challenges, including antitrust uncertainty and threats to Google's search dominance from generative AI.
A (somewhat) different take
I think Tepper was smart to scoop up more shares of Nvidia. My hunch is that the company will beat expectations when it reports quarterly results later this month. I have a different take on his other major AI moves in Q2, though.
Alibaba's valuation is simply too compelling to ignore, in my view, with its shares trading at only 14 times forward earnings. I also predict accelerating growth for the Chinese company's cloud unit.
Meta's AI strategy already seems to be paying off in some ways. Users are spending more time on its social media apps. Ad conversion rates are increasing. More importantly, the company could have a huge opportunity as the AI glasses market expands. It also has a lottery ticket of sorts with the big bet on AI superintelligence.
As for Alphabet, it's one of the most attractively valued major U.S. AI leaders. Google Cloud's business is booming. The launches of AI Overviews and AI Mode on Google Search appear to have reduced the threat from other genAI applications. Waymo could be a huge growth driver in the not-too-distant future if the robotaxi market explodes as some expect.
Tepper no doubt had good reasons to sell Alibaba, Meta, and Alphabet in Q2. However, I think all three AI stocks are great picks to buy for long-term investors who aren't billionaires.
