Key Takeaways
- David Tepper’s Appaloosa Management is heavily weighted toward AI‑related tech, with Amazon, Micron, Taiwan Semiconductor, and Alphabet making up roughly half of the portfolio.
- In Q2 the fund added SpaceX (ticker SPCX) and CoreWeave (CRWV), both of which Wall Street analysts see as having significant upside—about 50% for SpaceX and 62% for CoreWeave over the next 12 months.
- SpaceX posted a record‑setting IPO in June, revenue grew 92% YoY to $7.8 B, and its net loss per share fell from $1.0 B to $541 M, yet the stock trades at a lofty price‑to‑sales ratio of 69.1, leaving little margin for error.
- CoreWeave’s AI‑compute rental business saw revenue jump 112.5% YoY to $2.6 B, a $104 B backlog (up 245.5% YoY) and a price‑to‑sales ratio of 5.8, suggesting a more reasonable valuation despite widening losses.
- Both companies face execution risks—SpaceX’s Starship cadence, Starlink regulation, and AI investment payoff; CoreWeave’s ability to convert its massive backlog into profit while margins remain under pressure.
- Investors must weigh the high growth potential against the elevated valuations and uncertain timelines; a “margin of safety” mindset is crucial, as the article warns that “investing in stocks with little margin for error isn’t a sustainable strategy.”
Introduction: Tepper’s AI‑Centric Bet
Billionaire David Tepper, founder and president of Appaloosa Management, has turned increasingly bullish on technology and artificial intelligence (AI) stocks. The hedge fund’s portfolio is dominated by industry leaders such as Amazon (AMZN), Micron Technology (MU), Taiwan Semiconductor Manufacturing (TSM), and Alphabet (GOOG/GOOGL), which together account for roughly 50 % of the holdings. During the second quarter, Tepper’s team doubled down on AI by adding two high‑growth names: Space Exploration Technologies (SpaceX, ticker SPCX) and CoreWeave (CRWV). As the article notes, “David Tepper and his team aren’t the only ones who are optimistic about these companies’ prospects. Average price targets from Wall Street imply that SpaceX and CoreWeave could both rise meaningfully over the next 12 months.”
SpaceX: Record‑Setting IPO and Market Outlook
SpaceX made headlines by setting “the record for the largest IPO ever in June.” Since debut, the stock has exhibited notable volatility, “rising to as much as $225.64 and falling as low as $104.83.” As of the latest quote, shares trade around $148, slightly below the $150 opening price. Wall Street analysts, however, see considerable upside: “The company’s average price target is $222.32, according to Yahoo! Finance. That implies a 50% upside from current levels.” This optimism is rooted in SpaceX’s rapid top‑line expansion and its strategic push into AI‑related ventures.
SpaceX: Fundamentals Driving Growth
The company’s revenue surged 92 % year‑over‑year to $7.8 billion in Q2, a clear sign of strong demand for its launch and satellite services. While SpaceX remains unprofitable, its net loss per share “almost halved in the period, going from $1 billion to $541 million.” Analysts expect revenue growth to stay healthy and anticipate profitability soon, even as the firm continues to invest heavily in AI ambitions. Notably, “AI revenue grew much faster than the company average during the second period.” Beyond AI, SpaceX’s Starship test flights are progressing well, and its Starlink satellite constellation could evolve into a major global carrier, adding further layers to its growth narrative.
SpaceX: Valuation Stretch and Risk Factors
Despite the rosy fundamentals, the stock’s valuation raises concerns. SpaceX trades at a price‑to‑sales ratio of 69.1, a level that “assumes a somewhat aggressive positive outcome, leaving little room for error.” The article outlines several uncertainties: Starship may take longer than hoped to achieve the launch cadence needed for SpaceX’s space‑related goals; competitors could narrow the technology gap; Starlink could face regulatory or operational delays; and the payoff from its AI investments remains uncertain. These risks create a wide range of possible outcomes, meaning investors who buy at current levels are betting heavily on a best‑case scenario. As the piece cautions, “Those who stay on the sidelines right now may well miss out on amazing returns, but investing in stocks with little margin for error isn’t a sustainable strategy.”
CoreWeave: AI‑Compute Rental Powerhouse
CoreWeave occupies a niche as a provider of AI computing capacity, essentially renting out GPU‑heavy infrastructure to developers training large models. Its Q2 results were robust: “In the second quarter, CoreWeave’s revenue jumped 112.5% year over year to $2.6 billion.” The company posted an operating loss of $49 million, compared with operating income of $19 million a year earlier, and the bottom‑line loss per share widened to $1.14 from $0.60. These deteriorating margins reflect heavy reinvestment to expand its AI‑focused capacity.
CoreWeave: Backlog, Valuation, and Outlook
A key strength lies in CoreWeave’s massive revenue backlog. “At the end of the second quarter, CoreWeave had a revenue backlog of $104 billion, which grew 245.5% year over year.” This figure exceeds its trailing‑12‑month revenue of $7.59 billion by a wide margin, and the backlog did not even include “more than $25 billion in revenue backlog CoreWeave has already contracted during the third quarter.” Such a pipeline suggests that revenue should maintain a solid northbound trajectory for the next few years. Valuation‑wise, the stock appears less stretched than SpaceX: “A price-to-sales ratio of 5.8 seems fair for a company growing its revenue as fast as CoreWeave is.” Wall Street’s average price target sits at $144.46, implying a 62 % upside from current levels. The article adds that “the company’s capacity is sold out in the near-term, which justifies additional investments in the business,” reinforcing the view that demand remains strong.
Overall Assessment: Are These Stocks Worth Buying Now?
Both SpaceX and CoreWeave offer compelling growth stories tied to the AI boom, yet they present contrasting risk‑reward profiles. SpaceX’s breakthroughs in launch technology, satellite connectivity, and AI‑driven services are impressive, but its premium valuation leaves scant cushion for setbacks in Starship deployment, regulatory hurdles, or AI investment returns. CoreWeave, while still posting losses, benefits from a huge, expanding backlog and a more modest price‑to‑sales multiple, suggesting that the market is pricing in substantial future growth without demanding perfection.
Investors considering either name should heed the article’s warning about “little margin for error.” For SpaceX, a disciplined approach might involve waiting for a pull‑back toward a more reasonable valuation or seeking clearer evidence of profitability before committing significant capital. For CoreWeave, the emphasis should be on monitoring whether the company can translate its backlog into sustainable earnings as margins stabilize. In either case, the upside potential is real, but a margin‑of‑safety mindset—as advocated by the piece—remains essential to avoid overexposure to stocks that hinge on near‑flawless execution.
All quoted passages are taken verbatim from the source article to preserve the original wording and context.
https://www.fool.com/investing/2026/09/08/billionaire-david-tepper-just-bought-these-2-artificial-intelligence-ai-stocks-that-wall-street-thinks-could-soar-by-50-or-more/
