Billionaire David Tepper of Appaloosa Is Overweight AI Stocks -- but He Recently Dumped Every Share of the Hottest AI Stock of 2026
Sean Williams, The Motley Fool
Mon, August 31, 2026 at 2:26 PM GMT+3 4 min read
Although earnings season is the crown jewel of each quarter for investors, Form 13F filings can be equally important. A 13F shows investors which stocks Wall Street's savviest money managers, such as Appaloosa's billionaire investment chief, David Tepper, bought and sold in the latest quarter.
Tepper oversees more than $7.7 billion in assets under management and has heavily weighted his portfolio toward artificial intelligence (AI) stocks, including the usual suspects, Nvidia (NASDAQ: NVDA), Taiwan Semiconductor Manufacturing (NYSE: TSM), and Amazon (NASDAQ: AMZN). However, you might be surprised to learn that Appaloosa's boss kicked the hottest AI stock, Sandisk (NASDAQ: SNDK), to the curb in the second quarter.
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More than three-quarters of Appaloosa's portfolio is devoted to AI stocks
David Tepper closed out the June quarter with only 27 holdings. Nevertheless, approximately 77% of his fund's invested assets are tied to companies where AI is central to the growth thesis. Amazon, Taiwan Semiconductor, and Nvidia are Appaloosa's first, third-, and ninth-largest holdings, respectively.
The AI revolution is a multitrillion-dollar global opportunity, and Tepper has done his best to address all its aspects. For instance, Nvidia is the infrastructure backbone of AI-accelerated data centers. None of its external competitors is particularly close to matching the compute capabilities of Nvidia's graphics processing units (GPUs).
Taiwan Semiconductor is also a foundational player on the hardware side of the data center build-out. It's the world's largest contract chip fabricator, and has been expanding its chip-on-wafer-on-substrate capacity at a breakneck pace in an attempt to satiate the overwhelming enterprise demand for GPUs.
Meanwhile, Amazon gives Tepper exposure to real-world AI applications. Amazon Web Services (AWS) is the world's leading cloud infrastructure services platform by total spend. Since integrating generative AI and large language model solutions into AWS, sales for this high-margin segment have reaccelerated.
Gone in a flash
While Appaloosa's billionaire investor has been seemingly "collecting the whole set" of Wall Street's most influential AI stocks, he booted Sandisk, the highest-flying of them all, from his fund in the second quarter.
If you want a logical reason why the highly successful Tepper would send a foundational NAND flash memory and storage solutions provider in the AI data center build-out to the chopping block, look no further than profit-taking.
Sandisk shares have rallied more than 3,000% over the trailing year (as of Aug. 27), and Tepper made his initial purchase in the first quarter of 2027. Tepper could have quadrupled or quintupled his initial investment in a matter of months. Plus, Tepper has demonstrated that he's not afraid to cash in his chips, with an average hold time of around three years.
But there may be more to dumping Sandisk than meets the eye.
Historically, memory and storage solutions are highly cyclical. In other words, when things look abysmal for Sandisk is precisely when you want to invest in it. On the other hand, when Sandisk is trading at a mouthwatering single-digit forward price-to-earnings ratio has historically been when investors should sell. While demand for Sandisk's memory solutions has shown no signs of slowing, history is pretty clear about what comes next.
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Sean Williams has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
Billionaire David Tepper of Appaloosa Is Overweight AI Stocks -- but He Recently Dumped Every Share of the Hottest AI Stock of 2026 was originally published by The Motley Fool
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