Tepper Dumps AMD, Buys Broadcom

AMD stock is facing selling pressure as it competes with Nvidia. David Tepper's firm, Appaloosa Management, exited its stake in AMD and bought shares of Broadcom.

Investment firms managing over $100 million in stocks must file a form 13F with the SEC each quarter, which discloses the stocks the firm bought and sold. Appaloosa's latest 13F shows it no longer holds Advanced Micro Devices but has initiated a position in Broadcom (NASDAQ: AVGO).

Appaloosa's AMD Position

Appaloosa's reduced exposure to AMD wasn't a surprise. The firm had been decreasing its AMD position, with the exception of a small buy in the fourth quarter of 2024, before exiting it earlier this year.

Category
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
Data source: Hedge Follow

Why Broadcom?

AMD faces challenges and two of its core businesses have been slowing down. Although its data center GPU operation has gained traction, it still lags Nvidia. AMD has new chipsets planned for release, but so does Nvidia. Therefore, AMD may continue to face an uphill battle in the data center chip market due to Nvidia's lead.

Broadcom has 26 business units. It supplies network equipment for AI data centers and is involved in custom silicon. Broadcom's management announced a $10 billion share repurchase program. Broadcom is monetizing new assets from its VMware acquisition. The company can benefit from expanding markets connected through AI.

Broadcom stock trades at a forward price-to-earnings (P/E) multiple of 36.4. AI capital expenditures are increasing, which benefits Broadcom. The company's next growth phase is in the early stages.