Key Points
Tepper’s Appaloosa hedge fund increased its stakes in four AI stocks in Q2 and initiated a new position in another.
Wall Street thinks that four of these five stocks will deliver positive gains over the next 12 months.
The biggest potential winner of the group could soar roughly 29%, according to analysts.
10 stocks we like better than Amazon ›
What has provided the biggest tailwind for the stock market over the last three years? Anyone who has paid attention can easily answer that question. It’s artificial intelligence (AI).
One investor who has definitely noticed how AI has buoyed the stock market is David Tepper. But the billionaire hedge fund manager hasn’t just watched from the sidelines; he has invested heavily in AI stocks. Tepper bought five AI stocks in the second quarter of 2025. And Wall Street thinks one of them could soar the most.
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Tepper’s big AI buys in Q2
Amazon (NASDAQ: AMZN) ranks as the third-largest holding in the portfolio of Tepper’s Appaloosa hedge fund. Appaloosa added another 7.57% to its stake in the e-commerce and cloud services giant in Q2. At the end of the quarter, Tepper’s position in Amazon was valued at more than $592 million.
Appaloosa bought 1.45 million additional shares of Nvidia (NASDAQ: NVDA) in Q2. This purchase boosted the hedge fund’s stake in the GPU maker by more than 483%. It also more than offset Tepper’s sale of 380,000 Nvidia shares in the first quarter of 2025.
Tepper significantly increased his hedge fund’s holding in Taiwan Semiconductor (NYSE: TSM) in Q2 as well. He bought another 755,000 shares of the chip stock, boosting Appaloosa’s position by nearly 280%.
Intel (NASDAQ: INTC) takes the prize as Tepper’s biggest new AI stock added to Appaloosa’s portfolio last quarter. The billionaire bought 8 million shares of the chipmaker in Q2 — before the U.S. government’s move to take a 10% stake in Intel.
Micron Technology (NASDAQ: MU) isn’t a large holding for Appaloosa. However, the hedge fund owns a lot more of the memory and storage solutions company’s stock now. Tepper more than doubled Appaloosa’s stake in Micron in Q2.
What analysts think about these stocks
Unlike the Trump administration, Wall Street is decidedly bearish about Intel. The consensus 12-month price target for the stock is more than 10% below the current share price. Only two of the 44 analysts surveyed by LSEG in August recommended Intel as a “buy” or “strong buy.”
Analysts are more upbeat about Nvidia. The average price target for the stock reflects an upside potential of around 7%. However, look for upward revisions to analysts’ views of Nvidia if the company delivers a significantly better-than-expected (or worse-than-expected) fiscal 2026 Q2 update.
Wall Street is almost equally bullish about two of the AI stocks Tepper bought in Q2. The consensus price targets for Amazon and Taiwan Semi are 15% and 14.5%, respectively, higher than the stocks’ current share prices.
Analysts are most excited about the prospects for Micron over the next 12 months. The average price target reflects an upside potential of roughly 29%. Rosenblatt Securities’ Kevin Cassidy is especially optimistic about Micron, recently raising his target for the stock to $200 — more than 70% higher than the current share price.
Cassidy predicts that AI will continue to drive greater demand for Micron’s DRAM (dynamic random-access memory) technology. He also likes Micron’s valuation, with the stock trading at a forward price-to-earnings ratio of 8.98.
Is Wall Street right?
I think Wall Street analysts are generally correct in the direction of movement for the five AI stocks Tepper bought in Q2. Intel appears to be the weakest of the group, in my view. Micron’s valuation and AI-related growth could give it the most upside potential over the next 12 months. I also agree with analysts that Amazon, Nvidia, and Taiwan Semi have more room to run.
Which stocks are the best for investors to own over the long run? I’d go with Amazon and Nvidia.
Amazon Web Services remains the largest cloud service provider. It should continue to grow as AI models are trained and deployed in the cloud. Amazon’s e-commerce profits continue to increase robustly. The company has opportunities in other areas as well, including healthcare and satellite internet services.
Nvidia’s GPUs are still the gold standard in powering AI applications. I don’t see that changing anytime soon. The company’s Blackwell GPUs are selling hand over fist. Nvidia’s major customers (including Amazon) are investing heavily to expand their data center capacity. Whatever the company says in its Q2 update, I think Nvidia’s long-term prospects are bright.
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Keith Speights has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Intel, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: short August 2025 $24 calls on Intel. The Motley Fool has a disclosure policy.
