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David Tepper amassed a $20.6 billion fortune by making smart decisions. But some investors will likely question his recent decisions. In the fourth quarter of 2023, Mr. Tepper sold approximately 23% of his hedge fund position in Appaloosa Management. Nvidia (NVDA -4.50%).
In retrospect, this doesn’t seem like a very good move. Nvidia stock has soared more than 70% so far in 2024. However, Tepper is still investing heavily in GPU manufacturers. Nvidia remains Appaloosa’s fourth-largest stake. He also remains extremely bullish on artificial intelligence (AI). Here are the four AI stocks this billionaire investor bought in the fourth quarter.
1. Oracle
oracle (ORCL -1.84%) It ranks as Tepper’s largest new position in the fourth quarter. He bought 1.32 million shares of the database and software giant’s stock, worth nearly $140 million at the end of 2023.
Since then, Oracle’s stock price has increased by a single-digit percentage. The company has not yet had any major news that could trigger it into 2024. The situation could change quickly. Oracle is scheduled to announce its fiscal 2024 third quarter financial results on March 11th.
Meanwhile, Oracle has been working hard to strengthen its AI credentials. The company launched a new Oracle cloud infrastructure generated AI service in January.With this new service, customers of Oracle’s cloud platform can now meta platform. Oracle is also a key partner for Nvidia’s DGX Cloud AI supercomputing service.
2. Alibaba
Also equipped with Tepper alibaba (Baba 1.65%) In the fourth quarter. His hedge fund, which already had sizable positions in Chinese tech stocks, added another 750,000 shares. This was enough to lift Appaloosa’s Alibaba stock by nearly 21%.
It’s not hard to see why Tepper prefers Alibaba now. Stocks have fallen more than 20% in the past 12 months, largely due to slowing growth in China. However, this decline has made Alibaba’s stock price cheaper than in the past, with its forward earnings multiple of just 8.1x.
Alibaba has reportedly placed a large order for Nvidia chips for use in its cloud platform. However, due to restrictions imposed by the United States on the export of AI technology to China, it is not possible to introduce cutting-edge GPUs.
3. Amazon
Amazon (AMZN -0.81%) The company remained No. 3 in Appaloosa Management’s portfolio at the end of 2023. But Mr. Tepper has increased his stake in the e-commerce and cloud services giant by more than 5.3%, making it a bigger position for hedge funds. This turned out to be a great move, with Amazon stock posting double-digit gains by 2024.
Why does Tepper like Amazon? I think there are two reasons in particular that stand out. First, the company’s profitability and free cash flow are growing steadily. Second, the Amazon Web Services (AWS) cloud platform should see significant growth with the introduction of generative AI.
As with Oracle and Alibaba, Amazon also has a close relationship with Nvidia. AWS has been using Nvidia GPUs for many years. But Amazon is also at least somewhat of a rival to his Nvidia. The company has developed its own Trainium and Inferentia AI chips that AWS customers can use in their AI apps.
4.Microsoft
Tepper also rose to prominence in the following areas: microsoft (MSFT -0.66%) It increased by nearly 4% in the fourth quarter. The technology giant currently ranks as Appaloosa Management’s second-largest holding, accounting for 11.3% of its portfolio.
Microsoft has been another solid winner so far this year. AI continues to serve as a key growth driver for the company, integrating OpenAI’s GPT-4 across its products.
Not surprisingly, Microsoft is also one of Nvidia’s key partners. Among other things, the two companies are collaborating to connect his Nvidia’s AI Enterprise software with Microsoft’s Azure Machine Learning platform. However, like Amazon, Microsoft has also developed its own AI chips that will help reduce its dependence on Nvidia.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Keith Speights has worked at Amazon, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool recommends his Alibaba Group and recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
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