Billionaire David Tepper’s Top 10 Stock Picks Heading into 2025

In this article, we discuss billionaire David Tepper’s top 10 stock picks heading into 2025.

David Tepper is one investor who stands out in squeezing and generating optimum returns from distressed debt and undervalued equities. Born into a middle-class family, he has risen up the ranks to become one of the most successful investors on Wall Street. The billionaire investor started Appaloosa Management LP in 1993 after quitting his job at Goldman Sachs after being overlooked for promotion twice.

It is a decision the billionaire investor can never regret, as Appaloosa Management LP has grown to become one of the most followed hedge funds on Wall Street. It had one of its best performances in 2001 when it returned 61% on investing in distressed bonds after the dot com crash.

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Additionally, Appaloosa made $7 billion at the height of the great recession in 2009, when it opportunistically bought into distressed financial stocks and bonds. The focus on distressed situations has always defined Tepper. The investment strategy has allowed Tepper to accrue significant wealth, based on his net worth of about $21 billion. His hedge fund has made billions of dollars over the years, averaging 28% returns annually.

Tepper is already sensing a window of opportunity with Chinese equities trading at highly discounted valuations in response to deteriorating economic conditions. In the aftermath of the Chinese government initiating a series of stimulus packages to try and prop up the economy, Tepper believes it is time to take a closer look at Chinese equities.

“Everything,” Tepper said when asked what Chinese stocks to buy in an interview with CNBC. “Everything… ETFs, I would do futures, everything.” The investment thesis is based on the notion that it is wrong to fight the Fed, which in this case is the Chinese government and the central bank.

Tepper’s sentiment comes on China cutting key interest rates and announcing liquidity support for the stock market. China’s central bank has lowered bank reserve requirements and encouraged companies to buy back stocks. Appaloosa Management has already responded to China’s monetary policy changes by tweaking its portfolio. The hedge fund trimmed stakes in some of the big US tech companies whose valuations have exploded over the past year amid the artificial intelligence-driven rides. In return, it has ramped up stakes in Chinese internet giants.

“I don’t love the US markets on a value standpoint, but I sure as heck won’t be short, because I’d be nervous as heck of the setup with easing money everywhere, a relatively good economy, and China just doing massive stimulus coming in, so it would make me nervous not to be somewhat long the US,” Tepper said.

Amid the sentiments, technology stocks both in the US and China account for the most significant share of billionaire David Tepper’s top 10 stock picks. Additionally, the billionaire investor is heavily invested in the services sector and basic materials as part of his diversification strategy.

Our Methodology

To compile billionaire David Tepper’s top 10 stock picks heading into 2025, we scanned Appaloosa Management LP’s Q3 ’2024 portfolio. We identified the top ten stocks from the hedge fund’s portfolio. Then, we ranked these stocks in ascending order according to the size of the hedge fund’s investments in them.

At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Billionaire David Tepper’s Top 10 Stock Picks Heading into 2025

10. Advanced Micro Devices, Inc. (NASDAQ:AMD)

Appaloosa Management LP’s Stake Value: $186.23 Million

Number of Hedge Fund Holders: 107

Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor giant and the second-largest producer of graphics processing units (GPU). It offers GPUs that can be used in data centers, gaming, and embedded segments. While the stock is up by about 0.01% for the year, at the time of writing, its growth metrics and long-term prospects are improving.

Advanced Micro Devices, Inc. (NASDAQ:AMD) became a semiconductor giant developing chips for the gaming industry. It has since shifted its focus to chips that support the artificial intelligence revolution. According to CEO Lisa Su, there is a tremendous opportunity for growth by focusing on AI chips for powering data centers and other embedded businesses.

Focusing on AI chips for data centers allows the company to attract big customers like Meta Platforms, Microsoft, and Google, which house cloud computing servers. Advanced Micro Devices, Inc. (NASDAQ:AMD) is already recording strong demand for its data center chips. Meta Platforms acquired 1.5 million units of its EPYC computer processor, contributing to a 122% increase in data center segment revenue in the third quarter. The unit now accounts for about half of the company’s total revenues.

Likewise, Advanced Micro Devices, Inc. (NASDAQ:AMD) is doubling on acquisitions to exploit the demand for AI. It is in the process of acquiring server builder ZT Systems for $4.9 billion as it looks to challenge Nvidia’s AI dominance.

Here is what Columbia Threadneedle Global Technology Growth Strategy said about Advanced Micro Devices, Inc. (NASDAQ:AMD) in its Q2 2024 investor letter:

“Shares of Advanced Micro Devices, Inc. (NASDAQ:AMD) lagged the market after the company reported earnings results that, while generally strong, left the market wanting more. The company reported AI revenue of ~$600 million and increased its forward-looking outlook for AI revenue growth, but shares took a breather, as results missed elevated expectations after the stock’s strong performance. Despite the stock’s underperformance during the quarter, the company’s AI story remains very much intact. The growth outlook for the company is supported by better cloud demand, enterprise recovery and continued share gains ahead of the company’s new AI product launch.”

9. Lyft, Inc. (NASDAQ:LYFT)

Appaloosa Management LP’s Stake Value: $200.81 Million

Number of Hedge Fund Holders: 51

Lyft, Inc. (NASDAQ:LYFT) is a rideshare company that offers access to various transportation options. It provides a platform that connects drivers with riders. It also offers a car rental program, a network of shared bikes and scooters. The stock is up by about 15.51% for the year, an outperformance bolstered by strong financial results.

Lyft, Inc. (NASDAQ:LYFT) continues to deliver steady growth backed by investments across all businesses. The company generated its first quarterly profits of $5 million in August. The momentum continued in the third quarter as gross bookings rose 16%, resulting in a 32% revenue increase of $1.52 billion. Its adjusted earnings increased to $107.3 million from $92 million as reported on November 6, 2024.

The issuance of better-than-expected guidance for the fourth quarter and 2025 is the latest catalyst that’s strengthening Lyft’s sentiments in the market. Lyft, Inc. (NASDAQ:LYFT) expects fourth-quarter earnings to total $105 million, which is better than the $85 million that analysts expect. The company also raised its outlook for bookings growth and adjusted earnings margins.

Lyft, Inc. (NASDAQ:LYFT) has already moved to strengthen its edge in the ride-sharing business with plans to introduce autonomous vehicles next year. It plans to establish partnerships with Mobileye Global and May Mobility to take on Uber, which also plans to offer autonomous rides.

8. Oracle Corporation (NYSE:ORCL)

Appaloosa Management LP’s Stake Value: $268.11 Million

Number of Hedge Fund Holders: 91

Oracle Corporation (NYSE:ORCL) is a technology company that offers products and services that address enterprise information environments. As cloud computing has emerged as the foundation of the digital revolution, ORCL has emerged as a significant player in the burgeoning sector. The company boasts a client base that includes Fortune 500 companies, governments, and leading database enterprise companies.

Likewise, Oracle Corporation (NYSE:ORCL) is one of the biggest beneficiaries of the artificial intelligence-driven demand for cloud services. Its cloud services growth, AI vision and a shift of database businesses to the cloud affirm why it is one of Billionaire David Tepper’s top 10 stock picks. Its growth metrics and long-term prospects are solid, especially on signing agreements with big three cloud providers Amazon, Microsoft and Alphabet’s Google.

Agreements with tech giants open the way for Oracle Corporation (NYSE:ORCL) to introduce its services to new customers, strengthening its revenue base. Additionally, the company is expanding and strengthening its business on the international scene. It has partnered with Japan’s NTT Data to expand its cloud capabilities. Its cloud infrastructure is to be integrated into the US Army’s Integrated Personnel and Pay System-Army. The strategic partnerships should positively impact Oracle’s growth metrics, allowing it to generate significant shareholder value.

Madison Sustainable Equity Fund stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q3 2024 investor letter:

“The top contributors in the quarter were NextEra Energy, Oracle Corporation (NYSE:ORCL), Progressive Corporation, Equifax Inc., and United Healthcare. Oracle reported a strong first quarter with accelerating Cloud infrastructure demand. Oracle followed its solid first quarter with an upbeat analyst meeting which highlighted multi-year growth opportunities for the company.”

7. JD.com, Inc. (NASDAQ:JD)

Appaloosa Management LP’s Stake Value: $292 Million

Number of Hedge Fund Holders: 75

JD.com, Inc. (NASDAQ:JD) is a Chinese internet retail giant that offers computers, communication, and electronic products. It operates as a supply chain-based technology and service provider. The stock is up by over 37%, outperforming the S&P 500, that’s up by about 26%. The outperformance comes from the e-commerce giant successfully navigating a challenging market environment amid a slowing Chinese economy.

With the help of its strong logistics network and reputation for genuine goods, JD.com, Inc. (NASDAQ:JD) has become a major player in China’s e-commerce market. The company’s direct sales strategy gives it more control over its inventory and clientele. Likewise, it delivered better-than-expected third-quarter results on November 14, 2024, despite fierce competition from Alibaba and PDD holdings.

Its net profit was up 48% year-over-year to $1.62 billion, which was helped by a 5.1% increase in revenue to $260.39 billion. Retail sales, which account for the most significant share of the company’s revenue, were up 6.1% as logistics sales increased 7.9%. Strong performance in specific product categories demonstrates JD.com, Inc. (NASDAQ:JD)’s competitive differentiation in the Chinese e-commerce market. The appliance segment’s robust sales have primarily driven the company’s strong third-quarter projections for 2024.

The company’s ability to effectively navigate China’s declining consumption has further strengthened its position in the market. Over two years, JD.com, Inc. (NASDAQ:JD) has increased its net margin from 2.0% to 3.6%, exhibiting sound management and operational fortitude in the face of economic challenges.

Ariel Investments stated the following regarding JD.com, Inc. (NASDAQ:JD) in its Q3 2024 investor letter:

“China-based E-commerce company, JD.com, Inc. (NASDAQ:JD) was the top contributor in the quarter as the People’s Bank of China’s (PBOC) comprehensive stimulus measures bolstered investor confidence in the Chinese economy. The improving economic sentiment is fueling consumer spending which benefits the company’s retail operations. Additionally, the company’s strategic decision to diversify general merchandise product offerings, expand its third-party marketplace business and monetize advertising streams has contributed to consecutive quarterly earnings beats. JD.com is also poised to capitalize on the home appliance trade-in program, which is one of its largest product categories. Given the favorable market environment, the company’s strategic positioning and supply chain efficiency improvements, we continue to like its long-term growth prospects.”

6. Alphabet Inc. (NASDAQ:GOOGL)

Appaloosa Management LP’s Stake Value: $314.65 Million

Number of Hedge Fund Holders: 202

Alphabet Inc. (NASDAQ:GOOGL) is an internet content and information giant that offers a range of products, including Google Search, Google Maps, YouTube and Google Cloud. By controlling about 90% of internet searches, the company has succeeded in building a robust digital advertising business.

Alphabet Inc. (NASDAQ:GOOGL) is increasingly investing in artificial intelligence to apply on its search platform. The integration is part of the company’s effort to enhance user experience and engagement levels to draw in more advertising campaigns. Integrated AI features also help advertisers deliver ads to the most relevant audiences, creating better and more effective campaigns.

Investments in AI have been the catalyst behind Alphabet Inc.’s (NASDAQ:GOOGL) advertising business, which achieved an 11% revenue growth in the first nine months of the year. In addition to search and advertising, Alphabet has also emerged as a key player in cloud computing. Google Cloud generated a 35% increase in revenue in the third quarter. In contrast, Amazon Web Services generated a 19% increase in revenue.

Google Cloud is emerging as a key source of revenue and showing strong profitability with an operating margin of 17%. Given its investments in AI, there is cause for optimism regarding Google Cloud maintaining its growth momentum.

5. Meta Platforms, Inc. (NASDAQ:META)

Appaloosa Management LP’s Stake Value: $357.78 Million

Number of Hedge Fund Holders: 235

Meta Platforms, Inc. (NASDAQ:META) is a communication services company that offers products that enable people to connect and share with friends. Best known for its Facebook app, it also owns Instagram, Messenger, and WhatsApp. It’s one of the best-performing stocks in the Appaloosa Management portfolio, going by an 80.13% year-to-date gain.

Meta Platforms, Inc. (NASDAQ:META) controls about 21% market share in the US digital advertising sector. Likewise, it generates about 98% of its revenue from digital advertising on Facebook and Instagram. The remainder comes from WhatsApp Business Platform and the Reality Labs division. Its edge in digital advertising stems from the average user spending at least 30 minutes on Facebook, WhatsApp, and Instagram.

In addition, Meta Platforms, Inc. (NASDAQ:META) is investing in artificial intelligence to enhance user experience in its apps. The investments are already paying off, as the company’s ad impression was up by 7% in the third quarter. The average pricing per ad was up 11% in the quarter, allowing the company to generate $40.59 billion in revenue. Meta’s days of robust growth are far from over, as the global digital ad market is expected to grow at an average annual rate of 15.5% through the end of this decade.

Polen Capital mentioned Meta Platforms, Inc. (NASDAQ:META) in its Q2 2024 investor letter. Here is what the fund said:

“Meta Platforms delivered robust results in the period, with revenue growth accelerating in the first quarter. However, revenue comparisons for Meta will become more difficult from here, and its guidance for 2Q revenue fell below market expectations. After the company’s “year of efficiency,” where it cut costs in its core business, management is now indicating another ramp-up in GenAI and metaverse spending, spurring concerns about future profit margins. Metaverse spending, by our calculations, is now over $20 billion per year with little to no expected return on the foreseeable horizon.”

4. Microsoft Corporation (NASDAQ:MSFT)

Appaloosa Management LP’s Stake Value: $417.39 Million

Number of Hedge Fund Holders: 279

Microsoft Corporation (NASDAQ:MSFT) is a technology giant best known for its software offerings, including Office, Exchange, SharePoint, Microsoft Teams, and Office 365 Security and Compliance. The stock is up by about 19.60% for the year, bolstered by the company’s efforts to lead in artificial intelligence.

MSFT remains the top player in cloud computing, second to Amazon Web Services. The cloud business provides tremendous opportunities for growth as more enterprises migrate their operations to the cloud. In the third quarter, cloud revenue was up by 33% year-over-year, above the 29% growth recorded in the second quarter.

Microsoft Corporation (NASDAQ:MSFT) has demonstrated its ability to innovate and adapt in several areas outside of cloud computing. With the launch of Microsoft 365 in 2011, the company shifted its suite of productivity tools to a software-as-a-service (SaaS) model, which aided in growth. In the meantime, this presents the business with yet another significant AI opportunity.

Its investment of about $14 billion in OpenAI is helping strengthen growth prospects on the cloud. Customers have been demanding Azure’s services, which enable them to develop their own AI agents and copilots due to its pay-as-you-go consumption model. Additionally, this has led to a rise in the use of Microsoft Corporation’s (NASDAQ:MSFT) analytics and data services. CEO Satya Nadella has already reiterated that the AI business will surpass an annual revenue run rate of $10 billion in the next quarter.

Alger Spectra Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q3 2024 investor letter:

“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the quarter, shares detracted from performance after Microsoft reported weaker-than-expected fiscal fourth-quarter revenue growth in its Azure cloud segment. Additionally, management’s fiscal first[1]quarter 2025 Azure revenue guidance came in slightly below estimates. Despite this shortfall, management highlighted that AI contributed 7% to cloud growth, up from 6% last quarter and 3% a year ago. We continue to believe that Microsoft is well-positioned to maintain a leadership role in AI, given its innovative approach and significant growth potential.”

3. Amazon.com, Inc. (NASDAQ:AMZN)

Appaloosa Management LP’s Stake Value: $596.26 Million

Number of Hedge Fund Holders: 286

Amazon.com, Inc. (NASDAQ:AMZN) is a technology company that dominates e-commerce and cloud computing. Best known for offering a platform for selling and buying items, it’s also making a mark amid the digital revolution with the most significant cloud computing platform.

Amazon.com, Inc.’s (NASDAQ:AMZN) cloud computing division, Amazon Web Services (AWS), continues to be a key growth and profitability driver. The unit delivered a 19% increase in revenue in the third quarter. Even though the growth rate has leveled off, it is still higher than that of many rivals in the cloud services industry.

Amazon.com, Inc.’s (NASDAQ:AMZN) significant investments in AI infrastructure for AWS are anticipated to support future revenue growth. Amazon has raised its capital expenditure forecast for 2024 to about $75 billion, primarily to meet the demand for AI services on AWS.

In addition to growth in cloud computing, Amazon.com, Inc.’s (NASDAQ:AMZN) core e-commerce business is also doing well. Thanks to a robust supply and logistics network, the company is staring at another record-breaking holiday shopping season. Black Friday sales are already up by an average of 7%. Same-day and next-day delivery services are also up, growing at over 30% year-over-year.

AMZN has also moved to strengthen its grip on the e-commerce business with the launch of Amazon Haul. The launch seeks to improve the company’s push into the discount storefront business with products priced at less than $20. With the launch, it should take on Temu and TikTok shops, therefore expanding its market reach.

Polen Capital mentioned Amazon.com, Inc. (NASDAQ:AMZN) in its Q3 2024 investor letter. Here is what the fund said:

“The largest absolute detractors were Alphabet, Airbnb, and Amazon.com, Inc. (NASDAQ:AMZN). Amazon’s position as a notable detractor speaks more to the size of the position than the magnitude of the underperformance, as the company delivered a solid set of results during the quarter.

We trimmed our positions in Amazon, Alphabet, and Microsoft during the quarter. As we have previously, we trimmed Amazon slightly to bring the weight back to 15% for risk management purposes. We remain very optimistic about our investment thesis of strong revenue growth, even more substantial earnings, and free cash flow growth continuing over the next few years.”

2. PDD Holdings Inc. (NASDAQ:PDD)

Appaloosa Management LP’s Stake Value: $714.65 Million

Number of Hedge Fund Holders: 78

PDD Holdings Inc. (NASDAQ:PDD) is an internet retail company that offers an e-commerce platform. It offers products in various categories, including agricultural produce, apparel, food and childcare products. It is also the parent of the discount marketplace Temu, an online marketplace that is challenging Amazon and Alibaba.

Founded nine years ago, PDD Holdings Inc. (NASDAQ:PDD) has grown to become a force to reckon with in the Chinese e-commerce sector. It has become the third-largest e-commerce platform because it focuses on lower-income shoppers in lower-tier cities. The launch of a farm-to-table platform that allows farmers in China to connect with customers directly has also had a hand in its robust growth.

Taking Temu International has also had a hand in strengthening PDD Holdings Inc. (NASDAQ:PDD) prospects in internet retail. The platform is now one of the most popular, with 167 million active users worldwide. The expansion drive is expected to help PDD Holdings grow its revenue at a compound annual growth rate of 38% by 2026.

Despite stiff competition and challenging macroeconomics, PDD Holdings Inc. (NASDAQ:PDD) delivered solid third-quarter results on November 21, 2024. It logged revenues of $14.15 billion, up 44% year-over-year, as net income increased 61% to $3.59 billion. The better-than-expected results come from the company investing in its platform to attract more businesses and customers.

PDD Holdings Inc. (NASDAQ:PDD) is one of billionaire David Tepper’s top 10 stock picks heading into 2025. As the third largest e-commerce company by revenue, it isn’t being targeted and is in an antitrust violation, as with Alibaba.

1. Alibaba Group Holding Limited (NYSE:BABA)

Appaloosa Management LP’s Stake Value: $1.06 Billion

Number of Hedge Fund Holders: 115

Alibaba Group Holding Limited (NYSE:BABA) is a Chinese tech giant that provides technology infrastructure. It also offers market reach, allowing merchants, brands, and retailers to connect with customers and do business. It operates the largest e-commerce platform with a 46% market share in China. The company has also set sights on South Korean e-commerce opportunities with a 71 million investment in ably.

Alibaba Group Holding Limited (NYSE:BABA) delivered solid September quarter results on November 15, which was helped by robust growth in gross merchandise volume for Taobao and Tmall Group. Revenue in the quarter was up 5% year-over-year to $32.4 billion as net income increased 58% to $6.07 billion. Overseas online shopping businesses such as Lazada and Aliexpress were also on a roll, delivering a 29% year-over-year revenue increase to $4.34 billion.

Alibaba Group Holding Limited (NYSE:BABA) has been positioning itself as a leader in the booming artificial intelligence space. The company is leveraging AI features to strengthen its cloud computing solutions and attract customers. The efforts are already paying off, as the Cloud Intelligence Group posted a 7% increase in sales to $4.1 billion.

Here is what Oakmark International Fund said about Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2024 investor letter:

“Alibaba Group Holding Limited (NYSE:BABA) was the top contributor during the quarter. The China-headquartered consumer discretionary company’s stock price rallied following the announcement of a multipronged stimulus package by the Chinese government. Despite the stock’s strong performance for the quarter, we continue to believe there is upside in the name and that the market is not fully pricing in the turnaround potential for the e-commerce business or other optionality the company possesses.”

While we acknowledge the potential of Alibaba Group Holding Limited (NYSE:BABA), our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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