We recently published a list of Top 10 Growth Stocks in David Tepper’s Portfolio. In this article, we are going to take a look at where Microsoft Corporation (NASDAQ:MSFT) stands against other top growth stocks in David Tepper’s Portfolio.
Buy “everything” related to China has been David Tepper’s investment theme despite the uncertainties about the economy amid a trade spat with the US. The president and founder of Appaloosa Management LP believes China’s economy is well-positioned to bounce back from the COVID-19-triggered slowdown.
“Everything. ETFs, I would do futures — everything. Everything,” Tepper said during an interview on CNBC when asked about which Chinese equities.
Consequently, Appaloosa Management LP’s portfolio has built significant exposure to Chinese equities, with the biggest holding offering exposure to the country’s internet landscape. The investment strategy is increasingly paying off as Chinese stocks have enjoyed a bull run in response to Beijing unveiling a sweep of measures aimed at boosting economic growth.
READ ALSO: Billionaire Ken Fisher’s Top 13 Growth Stock Picks and Top 10 Blue Chip AI Stocks to Buy According to Billionaire Cliff Asness.
With 5.4% growth in the fourth quarter of 2024, China’s economy exceeded expectations thanks to Beijing’s stimulus policies, which included interest rate reductions. Investors are awaiting information on further fiscal assistance for the struggling real estate sector and consumer demand.
Increased focus on Chinese equities affirms Tepper’s philosophy, which often revolves around contrarian views on the market. His focus on Chinese equities comes amid growing concerns that they would be hit hard as the US imposes significant trade tariffs on China in a bid to trim the trade deficit between the two economic powerhouses.
Amid the concerns, the founder of Appaloosa Management LP insists on the need to deploy significant risk management to offset the impacts of the ongoing trade war. Similarly, Tepper has already emphasized the need to stay invested in bull markets, which appear and remain calm during market downturns, as the one in play in the US.
US equities have been under immense pressure in the first quarter of 2025, which is attributed to uncertainties about US trade wars and the reluctance of the US Federal Reserve to cut interest rates. The S&P 500 has already shed nearly 3% in value and is on course to record its first quarterly decline since July of 2023.
The selloff in the US equity markets also comes at the backdrop of disappointing financial results from some companies that have been reported. Market participants have also not been impressed by the guidance that signals potential weakness across the board amid deteriorating macroeconomics.
“You know there’s this negative bias out there. You just don’t know to what degree,” said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut.
Analysts are becoming increasingly wary regarding US corporate profits for the first quarter of this year, as policies from the Trump administration pose a risk of igniting a global trade conflict that could hinder economic expansion. Predictions for the S&P 500’s performance in the first quarter of 2025 have decreased by 4.5 percentage points, marking the most significant downward adjustment since the last quarter of 2023, according to his remarks.
Earnings growth for S&P 500 firms is now projected to be 7.7% compared to the previous year, which would represent the lowest rate since the third quarter of 2023 and a substantial drop from 17.1% in the final quarter of 2024, according to data from LSEG released on Friday.
“A lot of people are worried about things like tariffs … Really, it’s a broad economic slowdown that is the one thing that would be very difficult for companies to contend with,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute.
Our Methodology
We combed Appaloosa Management LP’s SEC Q4 2024 13F filings to identify the top 10 growth stocks in Appaloosa Management LP’s portfolio. From the resultant data, we settled on the top 10 picks and analyzed them on why they stand out as growth picks. Finally, we ranked the stocks in ascending order based on the value of Appaloosa Management LP’s equity stakes while also detailing hedge fund sentiment around the stocks, as of Q4 2024.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A development team working together to create the next version of Windows.
Microsoft Corporation (NASDAQ:MSFT)
Appaloosa Management LP’s Equity Stakes: $408.86 Million
Number of Hedge Fund Holders: 317
Microsoft Corporation (NASDAQ:MSFT) is a technology company that develops and supports software, services, devices, and solutions, including operating systems, productivity applications, cloud services, and gaming platforms. It is also one of the top growth stocks in Appaloosa Management LP’s portfolio, offering exposure to some of the fastest-growing segments, including artificial intelligence.
Microsoft Corporation (NASDAQ:MSFT) affirmed its push for growth opportunities around AI with a $10 billion investment in OpenAI. Since then, it has become a leader on two fronts: cloud computing and enterprise software. As companies seek to access compute and underlying models on the cloud, its cloud computing platform, Azure, has experienced significant growth.
Azure cloud AI services grew by 157% in Q2 fiscal 2025, helping the company’s cloud computing market share increase by 31%. The demand for AI services outstripped their supply, suggesting that future growth could be even more rapid. Amid the robust growth, Microsoft Corporation (NASDAQ:MSFT) is investing close to $80 billion in data centers that can manage growing workloads related to artificial intelligence (AI) and in search of new growth prospects. Revenue and net income continued to increase in the first half of fiscal 2025. Net income rose 10.4% to $48.8 billion, while sales surged 14.1% to $135.2 billion.
Overall, MSFT ranks 3rd on our list of top growth stocks in David Tepper’s Portfolio. While we acknowledge the potential of MSFT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MSFT but that trades at less than 5 times its earnings check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
