David Tepper's Biggest AI Play: It's Not Nvidia, It's Alibaba

David Tepper Bets Big on Alibaba’s AI Potential

Billionaire investor David Tepper is making a bold move in the AI sector, favoring Alibaba over Nvidia. His hedge fund, Appaloosa Management, holds a significant 12.4% stake in Alibaba, valued at $801.5 million as of June 2025. This strategic bet reflects Tepper’s confidence in Alibaba’s AI capabilities and growth potential, particularly in the context of China’s rapidly evolving tech landscape.

While many investors focus on U.S. tech giants like Nvidia, Tepper’s decision to prioritize Alibaba highlights the Chinese company’s increasing prominence in the AI space. Alibaba’s AI-related product revenue has shown consistent growth, with triple-digit percentage increases for eight consecutive quarters. This trend underscores the company’s success in integrating AI into its offerings and expanding its market presence.

Why Alibaba Stands Out in Tepper’s Portfolio

Alibaba is not just a major holding in Tepper’s portfolio—it is the largest AI-focused investment, accounting for 12.4% of Appaloosa’s total holdings. This significant allocation reflects Tepper’s bullish outlook on Chinese stocks, which he expressed in September 2024. His optimism is backed by attractive valuations and growth prospects, especially after China announced a substantial economic stimulus.

Alibaba’s valuation has more than doubled in 2025, with its forward price-to-earnings ratio rising to 23.3 from below 10 at the start of the year. Despite this increase, the company’s AI-driven revenue growth remains robust. Its Cloud Intelligence Group, a key driver of China’s AI ambitions, reported a 26% year-over-year revenue jump in the latest quarter. This growth is critical to Alibaba’s long-term strategy and its goal of leading the global AI market by 2030.

A Balanced AI Portfolio

Tepper’s investment in Alibaba is part of a broader AI-focused strategy. Of Appaloosa’s top 10 holdings, seven are directly tied to artificial intelligence. These include major players like Amazon, Alphabet (Google’s parent), Microsoft, Meta Platforms, and Uber Technologies. Each of these companies has deeply integrated AI into their operations, reflecting the technology’s growing importance across industries.

Despite his confidence in Alibaba, Tepper recently trimmed his stake by 23%, selling over 2 million shares in Q2. This move suggests a cautious approach to securing profits, though the stock’s subsequent gains indicate that holding onto the shares could have been even more lucrative. This adjustment underscores the balanced nature of Tepper’s investment strategy, which prioritizes both growth and risk management.

The Future of Alibaba’s AI Ambitions

Alibaba’s AI investments are central to its future growth. The company’s Cloud Intelligence Group is not only a major revenue driver but also a critical component of China’s broader AI strategy. By 2030, China aims to be a global leader in AI, and Alibaba’s cloud computing capabilities are expected to play a pivotal role in achieving this goal.

While Alibaba’s valuation has risen significantly, it remains a compelling choice for long-term investors. However, potential volatility due to governmental actions or market shifts could impact its performance. As Tepper’s investment demonstrates, Alibaba’s AI potential offers substantial opportunities, though investors should remain mindful of the risks.