For three years, the evolution of artificial intelligence (AI) hardware and software solutions has dominated the newswires on Wall Street -- and with good reason. Based on one estimate from the analysts at PwC, AI can lift global gross domestic product by $15.7 trillion in 2030. This is a big enough pie where a long list of companies can benefit.
However, Wall Street's savviest money managers have sent mixed signals regarding the companies on the leading edge of the AI revolution.
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No later than 45 calendar days following the end to a quarter, institutional investors with at least $100 million in assets under management (AUM) are required to file Form 13F with the Securities and Exchange Commission. This filing provides an easy-to-understand layout of which stocks, exchange-traded funds (ETFs), and select options Wall Street's top-tier fund managers purchased and sold in the latest quarter (in this case, the June-ended quarter).
Appaloosa's billionaire money manager, David Tepper, who's overseeing north of $6.4 billion in AUM, has been an especially active investor in the artificial intelligence arena. During the second quarter, Tepper greenlit the purchase of Nvidia (NVDA 1.65%), Taiwan Semiconductor Manufacturing (TSM 2.58%), which is best-known as "TSMC," and Intel (INTC 5.53%), but was a decisive seller of a "magnificent" stock that's the undisputed favorite AI company of billionaire fund managers.
AI hardware stocks were on the menu for Appaloosa's billionaire chief
If there was a theme to billionaire David Tepper's buying activity, at least in relation to the tech sector, during the second quarter, it was "AI hardware." Leading businesses responsible for the brains of AI-accelerated data centers were undeniably on the menu for Appaloosa's boss:
- Nvidia: 1,450,000 shares purchased (483% increase from March 31, 2025).
- TSMC: 755,000 shares purchased (280% increase from March 31, 2025).
- Intel: 8,000,000 shares purchased (new position).
The buying activity in Nvidia is especially eye-opening considering that Tepper had overseen a 97% reduction in his fund's position in less than two years, when accounting for Nvidia's historic 10-for-1 stock split in June 2024.
Perhaps the leading catalyst of this buying activity was Wall Street's tariff-induced mini-crash in early April. President Trump unveiled his tariff and trade policy on April 2, which included a 10% global tariff, as well as introduced higher "reciprocal tariffs" on select countries. Initially, these tariffs spooked the market and led to a historic multiday sell-off.
However, it's been a green light for the bulls since President Trump announced a 90-day pause on reciprocal tariffs on April 9. Investors who piled into beaten-down AI stocks have benefited greatly, and they were able to nab high-growth stocks at forward-year multiples that hadn't been seen in many quarters, if not years.
Additionally, the respective outlooks for Nvidia and TSMC are robust. Nvidia's Hopper (H100) and Blackwell graphics processing units (GPUs) have accounted for a significant percentage of the GPUs deployed in enterprise data centers.
Meanwhile, TSMC is rapidly expanding its chip-on-wafer-on-substrate (CoWoS) capacity to meet seemingly insatiable corporate demand for AI-GPUs. TSMC's CoWoS is a necessary technology for the packaging of high-bandwidth memory in AI-accelerated data centers.
As for Intel, it may have stood out to Tepper as a value-oriented buy. Intel has been trading below its book value and was awarded nearly $7.9 billion from the CHIPS Act by the Joe Biden administration in 2024 to construct chip fabrication plants domestically. An eventual transformation that'll see Intel grow into one of the world's leading chip foundries, coupled with its legacy cash flow from central processing units, may allow the company to reinvent itself over time.
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Fund managers' favorite AI stock was sent to the chopping block by billionaire David Tepper
On the other end of the spectrum, Tepper's Appaloosa completely exited five positions (excluding options) and pared down 16 others during the June-ended quarter. This includes selling 150,000 shares of social media titan and "Magnificent Seven" member Meta Platforms (META 2.04%), which reduced Appaloosa's position by 27% in just three months.
What makes this selling activity such a head-scratcher is there's not another AI stock that billionaire asset managers favor more than Meta. As of the end of March, Meta was the No. 1 holding for four of Wall Street's savviest money managers, and a prized position in the portfolios of other billionaire investors.
Arguably the most-logical of all reasons to sell 150,000 shares of Meta Platforms is simply to lock in gains. Between late 2022 and the second quarter of 2025, Meta stock rallied from sub-$100 to well north of $600 per share. Meta is Tepper's second longest-tenured holding (since the first quarter of 2016), which means there was a viable reason to take some chips off the table.
It's also plausible that Appaloosa's billionaire boss is concerned about the health of the U.S. and/or global economy.
Though Meta Platforms is investing in and incorporating AI solutions into its operations, nearly 98% of its net sales can be traced back to advertising. Ad revenue tends to be highly cyclical, with businesses not shy about paring back their marketing budgets at the first signs of trouble. Concerns about the domestic rate of inflation, as well as recent weakness in the jobs market, are all potential catalysts that can foreshadow weakness in the U.S. economy.
But it's far likelier that Tepper will eventually regret selling more than a quarter of his fund's stake in Meta Platforms.
No other social media company has come particularly close to attracting as many people as Meta does daily. During the month of June, its family of apps, which includes Facebook, Instagram, WhatsApp, Threads, and Facebook Messenger, averaged 3.48 billion daily users. This is more than enough eyeballs for Meta to command exceptional pricing power for ad placement.
We're also seeing early evidence that Mark Zuckerberg's company is successfully incorporating AI solutions into its ad platform. Giving businesses access to generative AI solutions has allowed them to tailor their messages to users, which in turn can improve ad click-through rates. This only serves to solidify Meta's premium ad-pricing power.
While Meta Platforms' stock isn't as cheap as it was three years ago, its accelerated growth rate more than makes up for its modest premium. Its forward price-to-earnings (P/E) ratio of less than 25 is reasonable considering the many ways AI can expand a revenue base that already has a high floor, thanks to its advertising operations.
