Tepper's Top AI Pick: Alibaba Over Nvidia

Published Date : 12/10/2025 

Billionaire investor David Tepper has made a significant bet on artificial intelligence (AI) with a substantial investment in Alibaba, rather than Nvidia. Discover why this Chinese tech giant is at the top of Tepper's portfolio. 

Roughly 12.4% of Tepper's $6.5 billion portfolio is invested in this Chinese AI leader.

Billionaire David Tepper bought shares of Nvidia hand over fist in the second quarter of 2025. His Appaloosa Management hedge fund increased its stake in the stock by a whopping 483%. However, Nvidia is emphatically not Tepper's biggest artificial intelligence (AI) bet.

Which stock holds that honor? Look across the Pacific. The top AI stock in Appaloosa's portfolio (and the biggest holding, period) is none other than Chinese internet giant Alibaba Group Holding.

There's no doubt that Tepper likes AI stocks. Of Appaloosa's top 10 holdings, seven fit squarely in the category — including Alibaba and Nvidia. Three of the top 10 are AI hyperscalers. Amazon ranks as Tepper's third-largest position. Google Cloud parent Alphabet is his eighth-largest holding. Microsoft, whose Azure platform trails only Amazon Web Services (AWS) in the cloud market, rounds out the billionaire's top 10.

Meta Platforms and Uber Technologies aren't hyperscalers. However, they're both big players in the AI space. Meta uses AI extensively in its social media platforms. It's also the leader in the AI glasses market. Uber has referred to itself as an 'AI-first' company for years, with AI integrated throughout its business. Two other members of Appaloosa's 10 biggest positions have deep AI ties. Vistra and NRG Energy provide electric power that is critical for running many data centers that host AI applications.

Only Alibaba stands at the top of Tepper's portfolio, though. The stock makes up 12.4% of his total holdings. His stake in the Chinese company was valued at $801.5 million as of June 30, 2025.

We don't have to guess why Tepper likes Alibaba. He told CNBC in an interview in September 2024 that he would buy 'everything' in China after the country announced a huge economic stimulus. That stimulus wasn't the only thing Tepper liked about Chinese stocks, though. He also told CNBC that many Chinese stocks offered attractive valuations and solid growth prospects. Alibaba checked off both boxes.

Granted, Alibaba's valuation isn't as attractive now as it once was. That's because the stock has more than doubled in 2025. Its forward price-to-earnings ratio now stands at 23.3. The multiple was below 10 at the beginning of the year.

What about Alibaba's growth prospects? They might not look too great, judging from recent history. The company reported year-over-year revenue growth of only 2% in its quarter ending June 30, 2025. Sure, earnings soared 76%. However, that's mainly because of mark-to-market changes with Alibaba's equity holdings and a gain from the sale of a business.

But Alibaba's future could be better than its past. The company's AI-related product revenue has delivered triple-digit percentage growth for eight consecutive quarters. Its Cloud Intelligence Group revenue jumped 26% year over year in the latest quarter. Alibaba's cloud platform is critical for China to achieve its goal of becoming the global leader in AI by 2030.

It's important to note that Tepper doesn't appear to be as enamored with Alibaba as he once was. He sold over 2 million shares in Q2, reducing his stake in the Chinese company by roughly 23%. I suspect this move resulted from a desire to take some profits off the table. However, Tepper would have made even more money by holding onto those shares of Alibaba. The stock has gained more since the end of Q2 than it did during the first half of the year.

To be sure, Alibaba isn't as great a bargain as it was several months ago. The stock could also be volatile if the Chinese government takes actions that hurt Alibaba. I don't think Tepper's top AI stock is the best AI stock to buy right now, but it's still a pretty good pick for long-term investors. 

Frequently Asked Questions (FAQS): 

Q: What is David Tepper's biggest AI investment?

A: David Tepper's biggest AI investment is in Alibaba Group Holding, which makes up 12.4% of his $6.5 billion portfolio.

Q: Why did David Tepper invest heavily in Alibaba?

A: Tepper invested heavily in Alibaba due to the company's attractive valuations, solid growth prospects, and its significant role in China's AI market.

Q: How much has Alibaba's stock grown in 2025?

A: Alibaba's stock has more than doubled in 2025, with its forward price-to-earnings ratio increasing from below 10 at the beginning of the year to 23.3.

Q: What is Alibaba's Cloud Intelligence Group's performance?

A: Alibaba's Cloud Intelligence Group revenue jumped 26% year over year in the latest quarter, and the company's AI-related product revenue has delivered triple-digit percentage growth for eight consecutive quarters.

Q: Why did Tepper reduce his stake in Alibaba?

A: Tepper reduced his stake in Alibaba by 23% in Q2, likely to take some profits off the table, although the stock has gained more since the end of Q2 than it did during the first half of the year. 

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