Key Takeaways:
- Billionaire David Tepper is shifting his investment portfolio to include a new AI stock, Qualcomm, after taking profits from other successful investments in Intel, Oracle, and Micron.
- Tepper’s hedge fund, Appaloosa Management, has a history of investing in distressed debt and undervalued equities, and Qualcomm’s current valuation and growth prospects make it an attractive addition to the portfolio.
- Qualcomm is well-positioned to capitalize on the proliferation of artificial intelligence, with a growing business in chip designs for Android devices, automotive connectivity and processing, and a burgeoning PC business.
- The company’s new AI chips, designed for large language model inference, could spark demand for more high-end smartphones and provide cost-effective solutions at the data center level.
Introduction to Tepper’s Investment Strategy
Billionaire David Tepper, founder of Appaloosa Management, has made a name for himself as a master of investing in distressed debt and undervalued equities. His hedge fund’s most recent 13F filing with the SEC revealed significant sales of stocks that have seen their share prices soar, including Micron Technology, Oracle, and Intel. As Tepper notes, "I’m a value investor, and I’m looking for things that are undervalued and have a potential for significant upside." With the profits from these sales, Tepper has reinvested in another AI stock that hasn’t quite taken off yet, but has the potential to become a key supplier of AI chips across various form factors over the next few years.
Taking Profits from Successful Investments
Tepper’s purchase of Intel, for example, was a savvy move, as the stock had fallen considerably from its late 2023 and early 2024 high price. As he notes, "We’re not afraid to take risks, but we’re also not afraid to take profits." When the U.S. government announced the purchase of a stake in Intel, sending the share price higher, Tepper was smart to take gains. Similarly, his investment in Oracle, which he started in late 2023, was also a successful move, as the stock made steady gains through 2024. However, Tepper sold the last of his shares after the stock skyrocketed higher in the second and third quarters last year, driven by strong earnings results and momentum in its cloud infrastructure business.
Micron Technology: A Longtime Holding
Micron has been a longtime holding for Tepper, and at one point, the stock accounted for roughly 10% of his portfolio. After Appaloosa trimmed the position, it accounted for just over 1% of the fund’s equities as of the end of the third quarter. As Tepper notes, "We’re always looking for opportunities to take gains and rebalance our portfolio." The company’s pre-announced third-quarter earnings, demonstrating considerable pricing power for its memory chips, sent the stock higher and likely pushed Tepper to take some more gains off the table.
Qualcomm: A New AI Chipmaker
One of Tepper’s biggest tech stock purchases in the third quarter is Qualcomm, a company that is quietly well-positioned to capitalize on the proliferation of artificial intelligence. As Tepper notes, "We’re looking for companies that have a strong position in the market and a potential for significant growth." Qualcomm’s high-end Snapdragon processors can be found in many Android devices, and the company also makes chips for automotive connectivity and processing, as well as a burgeoning PC business. The company’s new AI chips, designed for large language model inference, could spark demand for more high-end smartphones and provide cost-effective solutions at the data center level.
Qualcomm’s Growth Prospects
Qualcomm’s non-baseband chip sales could grow quickly as companies develop more use cases for AI and build smaller language models that can run on devices rather than in massive data centers. The company’s position in the automotive industry could also get a boost as more advanced AI features are introduced in cars. As Tepper notes, "We’re looking for companies that have a strong position in the market and a potential for significant growth." With the stock trading at a forward P/E of just 13, the shares look very inexpensive, making it a smart way to play the growing use of artificial intelligence across the cloud and personal devices. According to the article, "Qualcomm’s strength of the rest of its business and the tailwind of AI should enable it to produce steady revenue growth."
Conclusion
In conclusion, Tepper’s shift in portfolio to include Qualcomm is a savvy move, as the company is well-positioned to capitalize on the proliferation of artificial intelligence. With its growing business in chip designs for Android devices, automotive connectivity and processing, and a burgeoning PC business, Qualcomm has the potential to become a key supplier of AI chips across various form factors over the next few years. As Tepper notes, "We’re always looking for opportunities to take gains and rebalance our portfolio." With the stock trading at a forward P/E of just 13, the shares look very inexpensive, making it a smart way to play the growing use of artificial intelligence across the cloud and personal devices.
https://www.fool.com/investing/2026/01/25/billionaire-david-tepper-sells-oracle-micron-intel/
