David Tepper amassed a net worth of $23.7 billion in large part by being able to pick the best companies in hot areas. There's no hotter area right now than artificial intelligence (AI). Unsurprisingly, the billionaire hedge fund manager is invested heavily in AI.
Roughly $2.7 billion of Tepper's Appaloosa Management $6.45 billion portfolio is invested in seven AI stocks. And Wall Street thinks one of them will especially soar over the next 12 months.
Image source: Getty Images.
Tepper's top seven AI stocks
Alibaba Group Holding (BABA 0.31%) ranks as Tepper's largest holding. Appaloosa owned a little over 7 million shares worth $801.5 million at the end of the second quarter of 2025. Alibaba is the leader in the Chinese e-commerce and cloud services markets. The company plans to invest more than $50 billion over the next three years in AI-related infrastructure.
Tepper also has a big stake in the top U.S. e-commerce and cloud services company -- Amazon (AMZN +1.25%). At the end of Q2, Appaloosa's position in Amazon totaled roughly $592 million, making the stock the hedge fund's third-largest holding.
Meta Platforms (META 0.55%) isn't just a social media giant these days. It's also a leader in AI and is pioneering the new smart glasses market. Tepper owned 400,000 shares of Meta worth approximately $295 million as of June 30, 2025.
The billionaire investor recently told CNBC that he goes "back and forth" on Nvidia (NVDA 0.48%). He was definitely in "forth mode" in Q2, boosting Appaloosa's stake in the GPU maker by 483%. The hedge fund's position in Nvidia was valued at $276.5 million as of the end of the quarter.
NASDAQ: NVDA
Key Data Points
Google parent Alphabet (GOOG +0.34%) (GOOGL +0.20%) is Tepper's eighth-largest holding, one spot behind Nvidia. Even though Appaloosa slashed its stake in the search and cloud services giant by 25% in Q2, the hedge fund still owned a $266 million stake in it.
Microsoft (MSFT +1.62%) and Taiwan Semiconductor Manufacturing (TSM +0.42%) round out the list of Tepper's top seven AI stocks. His position in Microsoft was valued at nearly $249 million as of the end of Q2, followed closely by Taiwan Semi with a stake worth $232 million.
Wall Street's favorite
Tepper's favorite AI stock is arguably Alibaba, since it's his top holding. However, Wall Street isn't as bullish about the Chinese stock. Although 38 of the 43 analysts surveyed by S&P Global (SPGI 1.20%) in September rated the stock as a "buy" or "strong buy," the consensus 12-month price target for Alibaba is only slightly above the current share price.
NYSE: BABA
Key Data Points
Wall Street likes all of Tepper's top seven AI stocks. Alphabet has the weakest support, though, with 53 of 64 analysts (roughly 83%) rating the stock as a "buy" or better. The price target for Alphabet is also slightly below the current share price, following its significant gains this year.
Which of the stocks is Wall Street's favorite? Microsoft enjoys the broadest support in the analyst community. All but one of the 58 analysts surveyed by S&P Global this month rated the stock as a "buy" or "strong buy." The concensus 12-month price target for Microsoft is 21% higher than the current share price.
NASDAQ: MSFT
Key Data Points
However, Amazon is running neck-and-neck with Microsoft. Of the 66 analysts surveyed by S&P Global, 63 rated the stock as a "buy" or better. The average price target for the e-commerce and cloud services titan also reflected an upside potential only a hair lower than Microsoft's.
Are analysts right about Microsoft?
I'm not sure if Microsoft's stock will jump 21% over the next 12 months as analysts predict. However, I agree with the overall bullish sentiment on Wall Street about the stock.
Microsoft's integration of generative AI into its products has gone exceptionally well. Its decision to offer Anthropic's Claude AI models in addition to OpenAI's models in CoPilot Studio is a smart move, in my opinion.
As I said at the beginning of this article, much of Tepper's success stems from his ability to pick the best companies in hot areas. Microsoft is, without question, one of the best AI companies right now.
