Hedge fund titan David Tepper's Appaloosa Management made a strategic pivot in the second quarter, significantly increasing its exposure to megacap technology stocks, often referred to as the "Magnificent Seven," while simultaneously divesting from several high-flying memory chip manufacturers.
Regulatory filings released on Friday reveal Appaloosa's expanded commitment to Amazon, with its stake growing by over 15% to nearly $1.2 billion, cementing its position as the hedge fund's largest holding, according to InsiderScore. Tepper's bullish stance on leading tech companies extended beyond Amazon. The firm boosted its Meta Platforms position by an impressive 55%, reaching approximately $380 million. Additionally, Appaloosa added almost 7% to its Alphabet holding, pushing its value past $661 million. A new position in Apple, valued at more than $241 million, was also established during the latest quarter.
Conversely, Tepper initiated a notable reduction in his memory chip holdings. He slashed his position in Micron Technology by over 41%, even though it still remains Appaloosa's second-largest holding at around $1.125 billion. This move is particularly noteworthy as Tepper has been closely aligned with the artificial intelligence rally, suggesting he may have anticipated the July downturn in memory stocks.
Micron shares had experienced a phenomenal second quarter, soaring more than 240% — its largest quarterly gain ever — fueled by investor excitement over AI-related hardware demand. However, the stock has since retreated approximately 16% since the beginning of July, reflecting a broader correction within the memory chip sector. Despite this recent volatility, Wall Street analysts largely remain optimistic, with an average "buy" rating on Micron and an estimated 51% upside over the coming year, according to LSEG. Even with the recent volatility, the shares have still posted significant gains year-to-date, reflecting the strong Q2 performance.
Another significant divestiture in the memory sector was Sandisk, where Tepper zeroed out a stake exceeding $400 million. Sandisk shares, after a stellar 258% climb in the March-June period, have since tumbled nearly 28% in the third quarter.
Interestingly, a person familiar with the matter indicated that Appaloosa subsequently increased its overall exposure to memory stocks after the second quarter concluded, capitalizing on the sector's recent slump.
Beyond technology, Tepper's firm also diversified its portfolio by creating new positions in the industrial and travel sectors, including Boeing and American Airlines, valued at approximately $173 million and $136 million, respectively. Concurrently, Appaloosa exited its stakes in Corning, L3Harris, and RTX.
