David Tepper's Portfolio Pivot: How the Legendary Investor Chose Alibaba Over Nvidia in the AI Era

When David Tepper’s Appaloosa Management made headlines in Q2 2025 for ramping up its Nvidia position by 483%, few noticed what was really happening under the surface. Despite this dramatic expansion into the chip giant, Alibaba Group Holding—the Chinese internet behemoth—actually claims Tepper’s most significant commitment, representing a whopping 12.4% of his total holdings with a valuation exceeding $801 million as of mid-2025.

This strategic positioning reveals something essential about how David Tepper approaches artificial intelligence investing: it’s not just about the infrastructure vendors. The legendary investor is making a bold bet on which region will lead the next phase of AI development, and he’s betting substantially on China.

David Tepper’s AI-Centric Investment Architecture

When examining Appaloosa’s top 10 holdings, a clear pattern emerges. Seven of these core positions directly relate to artificial intelligence, creating a portfolio that’s essentially an AI industry play with multiple entry points.

Beyond Nvidia and Alibaba, David Tepper has constructed positions across the entire AI ecosystem. Amazon ranks as his third-largest holding, capitalizing on both its AWS cloud dominance and AI infrastructure requirements. Microsoft lands in his eighth position, riding on its Azure platform and enterprise AI deployment. Alphabet rounds out the cloud infrastructure trio, giving Tepper exposure to Google Cloud’s growing AI capabilities.

The portfolio extends beyond traditional data-center operators. Meta Platforms and Uber Technologies don’t directly host AI infrastructure, yet both represent significant AI bets in Tepper’s view. Meta has become a major player in AI-driven advertising and the emerging AI glasses market, while Uber has positioned itself as an “AI-first” company with artificial intelligence embedded throughout its operations.

Even Tepper’s positions in Vistra and NRG Energy—both electric utilities—reflect sophisticated AI thinking. These companies provide the electrical infrastructure that powers the data centers running computationally intensive AI applications. It’s a recognition that AI’s explosive growth depends on reliable, massive power supplies.

The China Economic Stimulus Catalyst: David Tepper’s Alibaba Thesis

David Tepper articulated his investment rationale clearly in a September 2024 CNBC interview: he would buy “everything” in China following the nation’s announcement of substantial economic stimulus measures. This wasn’t mere opportunism; it reflected Tepper’s conviction about policy-driven market dynamics in the world’s second-largest economy.

Alibaba met multiple criteria in Tepper’s investment framework. The Chinese government’s commitment to achieving AI leadership by 2030 created a multi-year tailwind for tech companies positioned to benefit from that agenda. Additionally, valuations looked compelling—the forward price-to-earnings multiple sat below 10 at the start of 2025, offering significant margin of safety.

The company’s AI trajectory supports Tepper’s conviction. Alibaba’s AI-related product revenue has achieved triple-digit percentage growth for eight consecutive quarters, demonstrating that the company isn’t just riding stimulus headlines but building genuine competitive advantages. The Cloud Intelligence Group, critical to China’s AI infrastructure development, delivered 26% year-over-year growth in the latest reported quarter.

Reassessing David Tepper’s Alibaba Position: Valuation and Performance

By mid-2025, David Tepper had already taken some chips off the table. During Q2, he reduced his Alibaba stake by approximately 23%—reducing his holdings by over 2 million shares. This move suggested profit-taking on a position that had more than doubled over the course of the year, pushing the forward P/E ratio from below 10 to 23.3.

The timing raises an interesting question about Tepper’s conviction level. The stock has appreciated even more substantially since the end of Q2, suggesting that his trimming may have been premature from a pure returns perspective. However, this is exactly the behavior of experienced investors managing portfolio concentration and locking in significant gains.

Recent revenue metrics show the company faces near-term headwinds. Year-over-year revenue growth stood at only 2% for the quarter ending June 2025, though earnings surged 76%—a gain largely attributable to mark-to-market adjustments on equity holdings rather than operational performance.

The Long-Term Case: David Tepper’s Conviction Despite Near-Term Questions

Despite the valuation expansion and recent profit-taking, David Tepper appears to maintain conviction in Alibaba’s long-term potential. While the stock no longer represents the bargain it was several months ago, it still embodies exposure to several powerful trends: Chinese government AI policy support, Alibaba’s genuine technological advances in cloud computing and AI, and the company’s critical role in China’s infrastructure development.

Risks certainly exist. The company’s stock can be volatile if Chinese government policies shift or if geopolitical tensions impact U.S.-China technology relations. The current valuation multiples leave less room for disappointment than existed earlier in 2025.

Yet for investors with a multi-year horizon, David Tepper’s portfolio construction suggests that Alibaba—rather than just the obvious AI chip and cloud plays—deserves consideration as part of a diversified artificial intelligence allocation. Tepper’s positioning implies he believes Chinese tech will play a more central role in global AI development than markets fully appreciate, and Alibaba stands as his primary vehicle for capturing that opportunity.