Billionaire investor David Tepper, who also owns the Carolina Panthers NFL team, needs no introduction in the investing world. His fund, Appaloosa Management, has achieved gross annualized returns of 28% since its launch in 1993, and had over $6.9 billion in assets at the end of 2025.
Tepper has made some big calls over his career, whether it was buying up distressed bank debt in 2009, betting that the government wouldn't let most banks fail, or in late 2010, when he went on CNBC and said, "Don't fight the Fed," referring to the idea that quantitative easing would lift stocks. That's why so many investors are always curious about what Tepper and his fund are up to in the markets.
In the fourth quarter of 2025, Appaloosa exited nearly all of the fund's bank stocks and increased its position in one of the world's largest makers of chip memory by 200%. Let's see why Tepper may have done so.
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A quick trade for the banks
Most hedge funds trade on a short-term basis, which is why investors really need to conduct their own due diligence and not blindly follow the trades of billionaires and hedge funds.
Tepper and his team recently made a short-term trade in the banking sector. In the third quarter of 2025, the fund took new positions in a handful of regional banks, including Truist Financial, Comerica, Western Alliance, Citizens Financial Group, Zions Bancorporation, and KeyCorp. Appaloosa then sold all of these positions sometime in the fourth quarter. While we don't know exactly when the fund bought and sold these positions, many of these regional bank stocks enjoyed a nice run in the back half of 2025.
Comerica even got acquired. The thesis is that banks would benefit from lower interest rates, which would steepen the yield curve, and that there would be more mergers and acquisitions, given the green light from the Trump administration.
While I think the rally could continue, valuations have risen during this run, and there are still risks concerning a recession or inflation remaining elevated, so perhaps Tepper and his team simply wanted to lock in gains.
Playing the memory shortage
During the fourth quarter, Tepper and his team also increased their position in Micron Technology (MU 3.21%) by 200% and held about $428 million worth of the stock at the end of 2025. At this time, Micron was the fourth-largest position in the portfolio. Assuming Appaloosa did not sell the stock, it turned out to be another prescient call. Micron's stock is up 36% year to date and 360% over the past year.
Micron is a leading company in memory and data solutions for a range of devices, including computers, smartphones, and now graphics processing units (GPUs) that train large language models (LLMs) powering artificial intelligence solutions. The company has become a premier AI pick-and-shovel play because Micron's high-bandwidth memory sits atop the chips and supports the GPU's data processing and parameter storage.
NASDAQ: MU
Key Data Points
As large language models add more parameters and store more data, they grow larger and require more memory. There's been massive demand for the kind of memory produced by Micron, one of the largest manufacturers of specialized dynamic random-access memory (DRAM) used in GPUs. DRAM and other memory prices are expected to surge, significantly boosting Micron's revenue. Wall Street analysts think revenue could more than double on a year-over-year basis on Micron's next earnings report, according to Barron's.
The company is also planning $200 billion in capital expenditures to further build out its U.S. operations and try and fill the supply imbalance. AI investors have been concerned about this kind of capex, questioning whether it will actually generate prudent returns, or what will happen if AI runs into obstacles like the build-out of the internet did.
Memory is capacity-constrained in the near term, and Micron trades around 12 times forward earnings. However, there could be competition, and the company is viewed as a cyclical commodity player that will live and die with broader AI demand, so I'd approach the stock a bit more cautiously after such a big run.
