David Tepper Sells AI Stocks
Source: fool.com
According to a Form 13F filing with the Securities and Exchange Commission, David Tepper of Appaloosa Management net-sold artificial intelligence (AI) stocks during the first quarter. The filing deadline for institutional investors overseeing at least $100 million was May 15.
Tepper's sales may be more than simple profit-taking. As of the end of March, Tepper oversaw close to $8.4 billion in assets under management.
Tepper's AI Stock Activity
Appaloosa opened a new position of 130,000 shares in Broadcom, an AI-networking specialist. It also added 60,000 shares of Meta Platforms and 20,000 shares of Taiwan Semiconductor Manufacturing to existing positions during the first quarter.
Based on Appaloosa's 13F, Tepper sold shares of five AI stocks in the quarter that ended in March. Shares of Nvidia, Microsoft, AMD, and Lam Research have increased as the AI revolution has taken shape. Appaloosa averages a holding period of around 29 months.
Potential Factors Behind the Sales
Demand for AI-graphics processing units (GPUs) and AI solutions has been strong. Nvidia's Hopper and Blackwell GPUs hold a market share lead in AI-accelerated data centers, and AMD is increasing production of its Instinct AI-accelerating chips. Intel's central processing units (CPUs) also support AI-data center infrastructure expansion.
AI-GPU scarcity has allowed Nvidia to place a premium on Hopper and Blackwell GPUs. However, AI-GPU scarcity is expected to decrease as AMD and other competitors increase production, and as many of Nvidia's customers develop AI chips internally. This could impact the pricing power of Nvidia, AMD, and Intel, and also semiconductor equipment companies like Lam Research.
Since the advent of the internet in the mid-1990s, next-big-thing trends have navigated a bubble-bursting event early in their expansion phase. Investors overestimate how quickly a new technology will gain adoption. Most businesses deploying AI solutions haven't yet figured out how to optimize those solutions and/or generate a profit on their AI investments. If the AI bubble were to burst, widespread weakness may be seen among AI stocks. Nvidia generated over 90% of its net sales from its data center segment in the fiscal fourth quarter.
Growth for Microsoft's Azure, which incorporates generative AI solutions, would likely slow during an AI bubble-bursting event.