Few data releases are more exciting than quarterly filed Form 13Fs with the Securities and Exchange Commission. A 13F provides a way for investors to track which stocks Wall Street's savviest money managers bought and sold in the latest quarter.
One prominent billionaire investor who rightly garners attention during 13F filing season (13Fs covering fourth-quarter trading activity were due on Feb. 17) is David Tepper of Appaloosa. Tepper's $6.4 billion investment portfolio is growth-stock oriented and strongly focused on game-changing trends, which, at the moment, means artificial intelligence (AI).
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Despite gravitating to AI stocks, Tepper was a seller of the face of the AI revolution, Nvidia (NVDA 1.24%), during the December-ended quarter. Meanwhile, an AI stock at the forefront of an addressable market that can 32X by 2030 took its place.
Tepper pares down Appaloosa's Nvidia stake
During the fourth quarter, Tepper green-lit the sale of 200,000 shares of Nvidia, reducing his fund's position to 1.7 million shares. This also knocked Nvidia from Appaloosa's fourth-largest holding, as of Sept. 30, to No. 7 by the end of 2025.
Profit-taking likely explains some of this selling, but perhaps not all of it. Nvidia has been a continuous holding for Tepper's fund since the first quarter of 2023, and its shares have soared by almost 1,200% since 2023 began.
NASDAQ: NVDA
Key Data Points
Tepper's decision to partially ring the register may also indicate concerns about an AI bubble and/or increasing competition.
With regard to the former, every next-big-thing technology for three decades has navigated an early innings bubble-bursting event. Although demand for Nvidia's graphics processing units (GPUs) has been insatiable in AI-accelerated data centers, businesses are likely years away from optimizing AI solutions to maximize sales and profits. If an AI bubble forms and bursts, as history suggests, Nvidia would be among the hardest-hit stocks.
Appaloosa's billionaire boss may also be worried about competitive pressures. Between growing external competition and many of Nvidia's top customers by net sales developing GPUs internally, there's a real possibility of Wall Street's largest public company losing valuable data center real estate.
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Micron pushes Nvidia down the pecking order in David Tepper's portfolio
The even-hotter AI stock that replaced Nvidia and became a top-five holding in Appaloosa's investment portfolio is memory and storage company Micron Technology (MU 2.82%). Tepper oversaw the purchase of 1 million shares of Micron during the fourth quarter, tripling his fund's position in just three months.
Micron is the world's second-largest supplier of high-bandwidth memory (HBM) -- the high-performance, stacked memory chips connected to GPUs that fuel rapid computing and graphics applications in AI-accelerated data centers. Bloomberg Intelligence estimates the global HBM market can grow 32-fold, from $4 billion to $130 billion, between 2023 and 2030.
NASDAQ: MU
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Given the insatiable demand for AI infrastructure, HBM is in short supply. When demand outpaces the supply of a good, its price (and gross margin) rises. This pricing power led to a nearly 18-percentage-point expansion in Micron's gross margin in the fiscal first quarter (ended Nov. 27) and a 160% increase in year-over-year operating cash flow.
The icing on the cake is that Micron remains reasonably cheap despite its shares nearly quadrupling since September began. Its forward price-to-earnings ratio of less than 10 has clearly enticed one of Wall Street's most successful billionaire money managers.
