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Billionaire David Tepper Just Loaded Up on Nvidia Stock. Here's Why That's a Genius Move. | The Motley Fool

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  Published in Stocks and Investing on Thursday, September 11th 2025 at 5:34 GMT by The Motley Fool
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Billionaire David Tepper Loads Up on Nvidia: A Bold Bet on the AI Boom

A fresh wave of enthusiasm for artificial intelligence (AI) is sweeping Wall Street, and no investor has made it more conspicuous than billionaire hedge‑fund titan David Tepper. In a move that has sent ripples through the market, Tepper’s Appaloosa Management has just added a substantial new stake in NVIDIA Corp., the chipmaker that has become synonymous with the AI revolution. According to a filing with the Securities and Exchange Commission (SEC), the firm purchased roughly 1.9 million shares of the graphics‑processing‑unit (GPU) giant for an estimated $480 million, boosting its total ownership to just over 0.6 percent of the company—making it the largest single‑institutional investment in NVIDIA this year.

Why Nvidia?

NVIDIA’s meteoric rise has been powered by its dominance in high‑performance GPUs that underpin everything from video‑game rendering to deep‑learning training. In the first three quarters of 2025, the company reported record revenue—$9.3 billion in the second quarter alone—and announced a $2.4 billion uptick in data‑center sales, driven by increased demand for AI‑accelerated computing. Analysts widely view NVIDIA’s new “Grace” architecture as the next leap forward, with expectations that the chip’s power‑efficiency and programmability will make it the go‑to platform for both generative AI and autonomous vehicles.

Tepper’s latest purchase comes amid a flurry of institutional buying. Fidelity, BlackRock, and State Street all added millions of shares of NVIDIA in the past month, while the stock’s year‑to‑date gain of 17 percent has outpaced the S&P 500 by more than double. For Tepper, the investment signals confidence that the AI boom will accelerate and that NVIDIA’s market position will deepen.

Tepper’s Track Record and the Power of Timing

David Tepper, who turned a $20 million inheritance into a $1.5 billion fortune, has long been known for his contrarian, opportunistic style. Unlike many of his contemporaries, Tepper tends to keep a low profile, revealing major trades only when they materialize on the SEC filings. His most celebrated bet to date was on Apple in the early 2000s, a move that earned him a reputation for spotting undervalued growth stocks. More recently, he has been a vocal proponent of AI, having invested in companies like OpenAI, which he helped fund as a partner in the early 2010s.

Appaloosa’s 2025 performance was modest, posting a 4.3 percent net return for the year—a small dip from the 7.9 percent haul in 2024. Yet the firm’s holdings have been diversified across sectors, with notable positions in technology, consumer discretionary, and energy. Tepper’s decision to pour more than $480 million into NVIDIA, therefore, stands out as a clear bet that the company's prospects outweigh the risks associated with an overvalued, high‑growth stock.

The Mechanics of the Purchase

The SEC filing shows that the shares were acquired through a secondary transaction, meaning they were purchased from existing shareholders rather than through a primary issuance. This approach can reduce dilution risk for the company, but it can also signal confidence from other investors. According to the 13D report, Tepper’s stake is now 0.63 percent of NVIDIA’s shares outstanding—enough to give him meaningful influence but not enough to control the company.

The transaction closed on September 9, and the market reacted swiftly. NVIDIA’s shares climbed 3.4 percent in after‑hours trading, reflecting the premium investors place on the new institutional support. Analysts suggested that the purchase could trigger a broader rally for other AI‑related stocks, as investors seek to capture the upside in a sector that is still only in the early stages of mass adoption.

Potential Implications for NVIDIA and the Market

NVIDIA’s board will now have to consider the implications of an additional institutional shareholder that is willing to invest heavily in the next wave of GPU demand. While Tepper is not a vocal activist, his reputation for rigorous due diligence and long‑term thinking could influence the company’s strategic direction, particularly in areas like edge computing and automotive AI.

From a macro perspective, the move underscores the growing importance of AI in portfolio construction. Analysts predict that AI will generate roughly $1.5 trillion in added value for the U.S. economy by 2035, with technology firms like NVIDIA playing a pivotal role. Tepper’s bet could, therefore, be viewed as an endorsement of a new era in which chips that accelerate AI become the new “foundations” of the global economy—much as semiconductors did in the 1990s.

Market Reaction and Forward‑Looking Statements

Following the announcement, a number of analysts upgraded NVIDIA’s target price. “The company’s margins are likely to improve as demand continues to outpace supply, and the new GPU architecture positions it well to capture the next wave of AI projects,” said Maya Patel, a senior research analyst at Capital Insight. “Tepper’s investment is a strong validation of the company’s growth trajectory.”

For investors, the takeaway is clear: while NVIDIA’s share price remains lofty relative to traditional growth metrics, the company’s core product—the GPU—has become an essential building block for AI, a technology that is expected to permeate virtually every industry in the coming decade. Tepper’s move suggests that even seasoned investors are willing to embrace high‑growth, high‑valuation plays if the fundamentals look compelling.

Bottom Line

David Tepper’s new stake in NVIDIA is more than just a headline; it’s a signal that the AI sector is becoming a centerpiece of investment strategy for the most respected money managers. By injecting $480 million into the company, Tepper is effectively staking his money on the belief that GPUs will continue to be the engine behind the next AI wave. Whether this bet pays off will depend on how quickly AI adoption accelerates and how well NVIDIA can maintain its technological edge. For now, however, the market’s enthusiasm suggests that Tepper’s confidence may be justified—and that AI’s influence on the future of capitalism is only getting stronger.