Key Points
Billionaire manager David Tepper has a great track record of making successful investments.
The payoff is still coming for the AI hyperscalers, and Tepper is positioning himself accordingly.
The AI hyperscalers will need a lot more computing components for their vision to come to life.
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Following what stocks billionaires are buying can be a smart investment strategy. Fortunately, if a fund has more than $100 million in assets, it is required to report at the end of each quarter what its holdings were. This information is made available to the public 45 days after the quarter ends, so investors can see how they are doing.
There are several short-term-oriented billionaire investors out there. These aren't great ones to follow because they are rapidly trading in and out of positions each day. Investors need to find like-minded billionaire investors who are holding a stock for the long term, and David Tepper at Appaloosa Management is one of my favorites. They have a strong track record of success, and when they make a move, I pay attention.
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Appaloosa bought five stocks during the fourth quarter, and luckily, nearly every one of these stocks is trading at a lower price now than at any point in the fourth quarter. So, if Tepper liked them in Q4, he's likely loving the prices he's getting in Q1.
Image source: Getty Images.
AI hyperscalers
Three stocks that Tepper bought during Q4 were Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL), Microsoft (NASDAQ: MSFT), and Meta Platforms (NASDAQ: META). These are three of the four big AI hyperscalers that investors often talk about, and Tepper is clearly bullish about their future. During Q4, he increased his Alphabet stake by 29%, Meta by 62%, and Microsoft by 8%.
Alphabet's stock price climbed in the middle of Q4, but has pulled back a bit from its highs. Meta is down 20% since the start of Q4 2025, and Microsoft is down nearly 30%. So, these stocks may be strong bargain opportunities.
Part of the reason for the decline of this trio is their AI spending plans. All three of these companies are spending a boatload of their cash flows to build out their AI computing footprint, something they think is necessary to handle the AI-first business world that's coming. If they don't spend now, they'll be behind in the future. This is the basic idea behind the massive spending sprees of each company, and the market doesn't like massive investments in business ventures with an unknown payoff amount, so it's punishing the stocks right now.
This could be a huge buying opportunity for these three, and I wouldn't be surprised if investors find out Tepper bought more of these three stocks when the next round of filings comes out around May 15.
AI infrastructure
Tepper also bought some AI infrastructure stocks. These are the companies making the products that the AI hyperscalers need to build out their computing footprint. Tepper and Appaloosa purchased Micron Technology (NASDAQ: MU) and Taiwan Semiconductor Manufacturing (NYSE: TSM) stock during Q4. They were big buyers of Micron stock, increasing their holdings by 200% in Q4. Taiwan Semiconductor was a smaller add, with only a 7% increase, but it's already a 5% stake in the portfolio, so it's still a significant holding.
Micron and Taiwan Semiconductor are similar ways to play the same trend. They both make microchips, with Taiwan Semiconductor making logic chips and Micron making memory chips. These are two of the broadest ways to play the AI build-out, as you don't have to pick a computing hardware winner like Nvidia or Advanced Micro Devices. Instead, these two will benefit from the general rising tide of AI computing power demand. Each of these two expects monster growth over the next few years, which should drive their stock prices higher.
Taiwan Semiconductor forecasts that its AI chip revenue will increase at a mid- to high-50% compound annual rate between 2024 and 2029. Micron believes that the high-bandwidth memory (HBM) market will expand from $35 billion in 2025 to $100 billion by 2028. Those are huge market expansions, making them smart buys and holds for the next few years.
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Keithen Drury has positions in Alphabet, Meta Platforms, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Meta Platforms, Micron Technology, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
