Tepper Dumps AMD, Buys Broadcom

David Tepper’s Appaloosa Management has made a significant shift in its investment strategy, exiting its position in AMD and purchasing shares of Broadcom. This move reflects the ongoing competition between AMD and Nvidia, as well as Broadcom’s growing presence in the semiconductor industry, particularly in AI and data center technologies.

According to the latest 13F filing with the SEC, Appaloosa Management no longer holds any shares in Advanced Micro Devices (AMD). Instead, the firm has initiated a position in Broadcom (NASDAQ: AVGO). This change comes as AMD faces increasing pressure from Nvidia in the GPU and chipset markets, while Broadcom capitalizes on opportunities in AI and custom silicon.

Appaloosa’s AMD Position

Appaloosa’s decision to reduce its exposure to AMD has been gradual. The firm had been steadily decreasing its AMD holdings over the past year, with a brief exception of a small buy in the fourth quarter of 2024. However, by the first quarter of 2025, Appaloosa had completely exited its AMD position, marking a significant shift in its investment strategy.

Data from Hedge Follow shows the following trend in Appaloosa’s AMD holdings:

Q1 2024: 1.6 million AMD shares owned
Q2 2024: 1.4 million AMD shares owned
Q3 2024: 1.1 million AMD shares owned
Q4 2024: 1.2 million AMD shares owned
Q1 2025: 0 AMD shares owned

This trend highlights Appaloosa’s growing caution regarding AMD’s prospects in the face of stiff competition from Nvidia.

Why Broadcom?

Broadcom’s diverse portfolio and strategic initiatives make it an attractive investment for firms like Appaloosa. The company operates 26 business units, supplying network equipment for AI data centers and engaging in custom silicon development. Additionally, Broadcom’s management recently announced a $10 billion share repurchase program, further bolstering investor confidence.

Broadcom’s acquisition of VMware has also provided new assets that the company is monetizing effectively. This acquisition positions Broadcom to benefit from expanding markets connected through AI, as AI capital expenditures continue to rise. Broadcom stock currently trades at a forward price-to-earnings (P/E) multiple of 36.4, indicating strong growth potential in the early stages of its next growth phase.

Challenges for AMD

AMD faces significant challenges in two of its core businesses, which have been slowing down. While its data center GPU operations have gained traction, the company still lags behind Nvidia in this critical market. Both AMD and Nvidia have new chipsets planned for release, but Nvidia’s dominant position may continue to pose an uphill battle for AMD.

The competition between AMD and Nvidia extends to the data center chip market, where Nvidia’s lead in technology and market share makes it difficult for AMD to gain a foothold. Despite AMD’s efforts to innovate, Nvidia’s strong presence in AI and high-performance computing remains a formidable obstacle.

Broadcom’s Growth Opportunities

Broadcom’s involvement in custom silicon and AI data centers positions it well for future growth. The company’s ability to monetize new assets from its VMware acquisition, combined with its $10 billion share repurchase program, signals a strong commitment to delivering value to shareholders. As AI continues to drive innovation in the semiconductor industry, Broadcom is poised to capitalize on these trends.

Investors like David Tepper are increasingly recognizing Broadcom’s potential, as evidenced by Appaloosa’s strategic shift from AMD to Broadcom. This move underscores the broader market dynamics at play, as firms reevaluate their portfolios in light of evolving competition and technological advancements.

Overall, Tepper’s investment in Broadcom reflects a calculated bet on the company’s ability to thrive in the AI-driven semiconductor landscape, while AMD grapples with the challenges posed by Nvidia’s dominance.