David Tepper's Biggest AI Play: It's Not Nvidia, It's Alibaba
Source: finance.yahoo.com
While many investors are focused on U.S. tech giants, billionaire David Tepper is making a big bet on China's Alibaba. His hedge fund, Appaloosa Management, has a significant stake in the company. But why Alibaba over the likes of Nvidia?
Tepper's Top AI Pick
Alibaba is currently the largest AI holding in Tepper's portfolio. It constitutes 12.4% of his total holdings, valued at $801.5 million as of June 30, 2025. Tepper's investment reflects confidence in the Chinese internet giant's potential.
AI Across the Portfolio
Of Appaloosa's top 10 holdings, seven are squarely in the artificial intelligence arena. Besides Alibaba and Nvidia, these include hyperscalers like Amazon, Alphabet (Google's parent), and Microsoft. Meta Platforms and Uber Technologies also make the list, reflecting their deep integration of AI.
Why Alibaba?
Tepper expressed his bullish stance on Chinese stocks in September 2024, citing attractive valuations and growth prospects. This came after China announced a substantial economic stimulus. Alibaba, according to Tepper, ticked both boxes.
Alibaba's Growth and Valuation
Alibaba's valuation isn't as cheap as it once was, having more than doubled in 2025. Its forward price-to-earnings ratio now stands at 23.3, up from below 10 at the start of the year. Still, the company's AI-related product revenue has shown impressive growth, with triple-digit percentage increases for eight consecutive quarters.
Cloud Computing Strength
The Cloud Intelligence Group revenue jumped 26% year over year in the latest quarter. Alibaba's cloud platform is essential for China's ambition to lead in AI by 2030. Its cloud computing capabilities are key to future growth.
Taking Some Profits
Tepper trimmed his Alibaba stake by roughly 23% in Q2, selling over 2 million shares. This move suggests a desire to secure profits. However, the stock's subsequent gains indicate that holding onto those shares would have been even more lucrative.
A Good Pick?
While Alibaba might not be the bargain it was months ago, it remains a solid choice for long-term investors. Of course, governmental actions impacting Alibaba could introduce volatility. It's worth noting that other stocks may offer more compelling opportunities right now.