David Tepper’s Appaloosa Management significantly adjusted its portfolio in Q2, increasing investments in tech giants like Amazon, Meta, and Alphabet, while cutting back on memory chip stocks such as Micron. This strategic shift comes amid a volatile period for AI-related hardware demand.
Despite selling off portions of his memory chip holdings, Tepper also initiated new positions in Apple and expanded into the airline industry with investments in Boeing and American Airlines.
Hedge fund titan David Tepper, through his firm Appaloosa Management, made significant strategic shifts in the second quarter, divesting from AI-related memory chip stocks while substantially increasing his holdings in the 'Magnificent Seven' tech giants. This pivot comes as the market grapples with the volatile nature of AI-driven hardware demand.
Photo Credit: CNBC
Regulatory filings reveal that Appaloosa boosted its Amazon stake by over 15%, pushing its value to nearly $1.2 billion and solidifying it as the fund's largest holding. Tepper's enthusiasm for large-cap tech extended to Meta Platforms, where his position grew by nearly 55% to approximately $380 million. His Alphabet holding also saw an increase of nearly 7%, reaching over $661 million. Furthermore, Tepper initiated a new position in Apple valued at more than $241 million.
Conversely, Tepper significantly reduced his stake in Micron Technology by over 41%. Despite this reduction, Micron remained Appaloosa's second-largest holding, valued at around $1.125 billion. This move is particularly noteworthy given Tepper's previous alignment with the AI rally. He also completely exited a stake in SanDisk worth over $400 million.
The divestment from memory stocks occurred just as these companies experienced a sharp pullback. Micron shares, which had surged over 240% in the second quarter, have since dropped nearly 16% from their July peak, mirroring a broader downturn in the memory chip sector. However, Wall Street analysts remain optimistic about Micron's long-term prospects, with an average 'buy' rating and an estimated 51% upside potential over the next year.
Following the end of the second quarter, a source familiar with the matter indicated that Appaloosa has since increased its overall investment in memory stocks, capitalizing on the recent slump in the sector.
Outside of the technology sector, Tepper also established new positions in aviation and aerospace companies, investing approximately $173 million in Boeing and $136 million in American Airlines. Concurrently, he divested stakes in Corning, L3Harris, and RTX.
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