10 Tech Stocks to Buy According to Billionaire David Tepper

Published on October 12, 2021 at 9:59 am by Sheryar Siddiq in Hedge Funds, News

In this article, we discuss the 10 tech stocks to buy according to Billionaire David Tepper.

Born in Pittsburgh, Pennsylvania, Billionaire David Tepper is regarded as a superstar in the world of hedge funds, famous for his investment in depressed bank securities during the financial crisis, generating a return of 132% in 2009, of which $4 billion went to his own personal wealth, making him the top-earning hedge fund manager that year.

Having started his career as a credits analyst at Goldman Sachs, David Tepper established Appaloosa Management, his own investment fund, after being passed over for a partnership at the firm twice. With an initial investment of $57 million, his fund generated a return of 57.6% in the first year, managing to top the broader market index in the next three years. Tepper is known for investing in distressed debt, alongside bonds and preferred stocks, and converting it into equity ownership.

Appaloosa Management, as an investment firm, manages more than $4.8 billion in its investment portfolio, as of the end of the second quarter. The fund’s portfolio is diversified across 10 principal sectors, with the Technology sector proving to be the heaviest one, making up 33.8% of the total portfolio value. A majority of the companies in the fund’s investment portfolio consist of large-cap companies, with stocks scaling up to more than $10 billion in market capitalization making up 45% of the fund’s total value.

Some of the notable stocks present in the investment portfolio of Appaloosa Management at the end of the second quarter of 2021 include Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc. (NASDAQ:GOOG), Facebook, Inc. (NASDAQ:FB), Microsoft Corporation (NASDAQ:MSFT) and Micron Technology (NASDAQ:MU), among others discussed in detail below.

Our Methodology

With this background in mind, let us now look towards the 10 tech stocks to buy according to billionaire David Tepper. We made use of Appaloosa Management’s 13F portfolio for the second quarter for this analysis.

Why should we pay attention to David Tepper’s stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

10 Tech Stocks to Buy According to Billionaire David Tepper

10. Visa Inc. (NYSE:V)

Tepper’s Stake Value: $64.3 million

Percentage of David Tepper’s 13F Portfolio: 1.33%

Number of Hedge Fund Holders: 162

Visa Inc. (NYSE:V) is a California-based multinational financial services company that enables electronic funds transfers throughout the world. Ranked tenth on our list of the 10 tech stocks to buy according to Billionaire David Tepper, Visa Inc. (NYSE:V) has a market capitalization of $490.15 billion.

David Tepper’s Appaloosa Management currently owns 275,000 shares of Visa Inc. (NYSE:V), amounting to over $64.3 million in worth, accounting for 1.33% of the fund’s portfolio value. At the end of the second quarter of 2021, 162 hedge funds in the database of Insider Monkey held stakes worth $27.6 billion in Visa Inc. (NYSE:V), down from 164 in the previous quarter with stakes worth $26.5 billion.

The company issued its quarterly earnings report for the second quarter of 2021 in March, with earnings per share at $1.38, beating forecast estimates by $0.11. The company also reported a revenue of $5.73 billion, surpassing predicted revenues by $175.03 million.

In its Q1 2021 investor letter, ClearBridge Investments declared selling off companies that were not as profitable to include Visa Inc. (NYSE:V) to their portfolio. Here is what the fund said:

“To make room for these new names with more attractive outlooks related to the reopening, we sold out of companies where the thesis is not playing out at the pace we expected including Visa.”

9. QUALCOMM Incorporated (NASDAQ:QCOM)

Tepper’s Stake Value: $73.3 million

Percentage of David Tepper’s 13F Portfolio: 1.51%

Number of Hedge Fund Holders: 72

QUALCOMM Incorporated (NASDAQ:QCOM) is a multinational corporation that designs and manufactures semiconductors, software, and other services related to wireless technology. The California-based company ranks ninth on the list of the 10 tech stocks to buy according to billionaire David Tepper.

In the second quarter of 2021, QUALCOMM Incorporated (NASDAQ: QCOM) reported an EPS of $1.90, beating estimates by $0.23. The company’s revenue came in at $7.92 billion, up 52.23% year-over-year and beating revenue estimates by $304.53 million.

Appaloosa Management, in its portfolio for the second quarter of 2021, holds 513,000 shares of QUALCOMM Incorporated (NASDAQ:QCOM), worth $73.3 million, representing 1.15% of the fund’s value. By the end of the second quarter of 2021, 72 hedge funds out of the 873 tracked by Insider Monkey held stakes in QUALCOMM Incorporated (NASDAQ: QCOM) worth roughly $4.04 billion. This is compared to 73 hedge funds in the previous quarter with a total stake value of approximately $2.76 billion.

On October 1, Jefferies analyst Kyle McNealy initiated coverage of QUALCOMM Incorporated (NASDAQ:QCOM) with a Hold rating and $137 price target.

Just like Alphabet Inc. (NASDAQ:GOOG), Facebook, Inc. (NASDAQ:FB), Amazon.com, Inc. (NASDAQ:AMZN), Micron Technology (NASDAQ:MU), and Microsoft Corporation (NASDAQ:MSFT), QUALCOMM Incorporated (NASDAQ:QCOM) is one of the most notable stocks in David Tepper’s portfolio.

ClearBridge Investments, in its Q1 2021 investor letter explained why semiconductor companies, including QUALCOMM Incorporated (NASDAQ:QCOM) faced issues. Here is what the fund said:

“Within IT, we have also increased exposure to a cyclical semiconductor industry currently working through a severe supply shortage due to several years of capacity reductions, COVID-19 shutdowns, and one-off production delays as well as demand resilience in areas like autos and smartphones. The main risk for semiconductors is short-term revenue pressure until capacity catches up with demand, which hurt wireless chipmaker Qualcomm. Looking past current constraints, we expect the industry to see a strong second half and solid growth in 2022.”

8. Microsoft Corporation (NASDAQ:MSFT)

Tepper’s Stake Value: $84.6 million

Percentage of David Tepper’s 13F Portfolio: 1.75%

Number of Hedge Fund Holders: 238

Microsoft Corporation (NASDAQ:MSFT) is a multinational technology company that specializes in the production of computer software, consumer electronics and computer related services. Ranked eighth on the list of the 10 tech stocks to buy according to billionaire David Tepper, Microsoft Corporation (NASDAQ:MSFT) has a market capitalization of $2.17 trillion.

David Tepper’s hedge fund owns 312,500 shares of Microsoft Corporation (NASDAQ:MSFT), amounting to $84.6 million in worth and representing 1.75% of the fund’s portfolio. Of the 873 hedge funds tracked by Insider Monkey, 238 funds have positions in Microsoft Corporation (NASDAQ: MSFT) in the second quarter of 2021, worth over $62.4 billion.

Microsoft Corporation (NASDAQ:MSFT) announced its earnings for the quarter on July 26th, 2021, with reported earnings per share of $2.17, beating estimates of $1.92. The software giant also reported a revenue of $46.15 billion, compared to estimates of $44.30 billion.

On September 17, Tigress Financial analyst Ivan Feinseth raised his price target on Microsoft Corporation (NASDAQ:MSFT) to $366 from $303 and kept a Buy rating on the shares, as the analyst expects another strong performance of cloud-based services in the quarter.

Baron Opportunity Fund, in its Q2 2021 Investor Letter, expressed its expectations for the solid growth and profitability of Microsoft Corporation (NASDAQ:MSFT). Here is what the fund said:

“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft was a top contributor in the period because it trades at reasonable free cash flow and earnings valuations, has cloud and digital transformation tailwinds at its back, reported a solid March quarter, and beat Street expectations by a wide margin. Microsoft’s results continued to be strong across the board, with Azure cloud computing revenues up 46% in constantcurrency (“cc”) terms and commercial cloud bookings growth of 38% cc, the best in years. Microsoft also reported robust profitability growth, with operating income expanding 31% and GAAP earnings up 45%. We believe the company is well positioned for continued solid growth and profitability through market share gains as more companies look to transform and digitize their businesses as they move operations to the cloud.”

7. Twitter Inc. (NYSE:TWTR)

Tepper’s Stake Value: $89.4 million

Percentage of David Tepper’s 13F Portfolio: 1.85%

Number of Hedge Fund Holders: 89

Twitter, Inc. (NYSE:TWTR) is a social networking and microblogging company that provides a platform for users to interact in real-time. The networking company has a market capitalization of $49.46 billion and is ranked seventh on the list of the 10 tech stocks to buy according to billionaire David Tepper.

On July 22, Twitter, Inc. (NYSE:TWTR) reported an EPS of $0.20, beating the market consensus by $0.13. Additionally, the company also generated revenues amounting to $1.19 billion, crossing estimates revenues by $126.56 million.

According to the recent 13F Filings, Appaloosa Management holds 1.3 million shares of Twitter, Inc. (NYSE:TWTR), amounting to $89.4 million in worth and accounting for 1.85% of the fund’s investment portfolio. As of the second quarter of 2021, 89 hedge funds tracked by Insider Monkey have positions in Twitter, Inc. (NYSE:TWTR), worth over $6.03 billion, compared to 107 hedge funds in the first quarter, worth $4.53 billion.

In its Q2 2021 investor letter of ClearBridge Investments, the fund considers Twitter, Inc. (NYSE:TWTR) an improving growth story. Here is what the fund said:

“Not every portfolio company will neatly fit into one of these four growth segments and some may move from one to another over time. Social media platform Twitter could be considered an improving growth story due to the initiatives put in place to grow and better monetize its user base. With the global return of live events and sports causing a rebound in advertising, combined with other new services beginning to thrive, this is a company with the fundamentals to be categorized as a disruptor.”

6. Uber Technologies Inc. (NYSE:UBER)

Tepper’s Stake Value: $101.9 million

Percentage of David Tepper’s 13F Portfolio: 2.11%

Number of Hedge Fund Holders: 135

Uber Technologies, Inc. (NYSE:UBER) more commonly known simply as Uber, is a technology company that provides transportation, food delivery, package delivery and courier services. The company has a market capitalization of $88.66 billion, and is ranked sixth on the list of the 10 tech stocks to buy according to billionaire David Tepper.

Uber Technologies, Inc. (NYSE:UBER) released its quarterly earnings report for the second quarter of 2021 on August 4. The declared earnings per share by the company was $0.58, beating the consensus estimates by $1.07. The revenue generated was $3.93 billion, which beat the market estimated revenue of $3.76 billion by $167.18 million.

David Tepper presently holds over 2 million shares of Uber Technologies, Inc. (NYSE:UBER), worth over $101.9 million, and representing 2.11% of his hedge fund’s total investment portfolio. By the end of the second quarter of 2021, 135 hedge funds out of the 873 tracked by Insider Monkey held stakes in Uber Technologies, Inc. (NYSE:UBER), worth $10.4 billion, up from 130 hedge funds in the preceding quarter that had a total stake value of approximately $1.05 billion.

In its Q2 2021 investor letter, RiverPark Funds, an investment fund, states that Uber Technologies (NYSE:UBER) was their top detractor for the second quarter of 2021. Here is what the fund said:

“UBER was our top detractor for the quarter. Delivery growth remains strong, and ride-sharing has started to recover, though still down year over year (vs. pre-COVID results). Gross bookings grew 24% year over year, driven by 166% Delivery growth.

Despite the COVID disruption, UBER remains the undisputed global leader in ride-sharing, with greater than 50% share in every major region in which it operates. The company is also a leader in food delivery (64% of 1Q21 revenue), where it is number one or two in the more than 25 countries in which it operates. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its more than 100 million users (by comparison, Amazon Prime has 130+ million members) and penetrate new markets of ondemand services, such as grocery delivery, truck brokerage and worker staffing for shift work. Its New Verticals (non-food delivery such as grocery, convenience, and alcohol) business hit a $3 billion annualized run rate in March, up 77% quarter over quarter.

UBER, at its current $91 billion market capitalization, trades at 4x next year’s revenue from its two core businesses. Additionally, the company has substantial, unrecognized, value in its several nascent development businesses and another $13 billion in equity stakes in synergistic businesses around the world.”

5. Alibaba Group Holding Limited (NYSE:BABA)

Tepper’s Stake Value: $132.6 million

Percentage of David Tepper’s 13F Portfolio: 2.74%

Number of Hedge Fund Holders: 146

Alibaba Group Holding Limited (NYSE:BABA) is a multinational technology company that specializes in e-commerce, retail and cloud computing. Ranked fifth on the list of the 10 tech stocks to buy according to billionaire David Tepper, Alibaba Group Holding Limited (NYSE:BABA) has a market capitalization of $391.96 billion.

David Tepper’s Appaloosa Management currently owns 585,000 shares of Alibaba Group Holding Limited (NYSE:BABA), amounting to $132.6 million in worth and representing 2.74% of the fund’s portfolio. At the end of the second quarter of 2021, 146 hedge funds in the database of Insider Monkey held stakes worth $16.79billion in Alibaba Group Holding Limited (NYS:BABA), down from 135 in the previous quarter with stakes worth $15.4 billion.

On September 6, KGI Securities initiated coverage of Alibaba Group Holding Limited (NYSE: BABA) with a “Neutral” rating and HK$205 price target.

In the Q2 2021 investor letter of RV Capital Management, the fund named Alibaba Group Holding Limited (NYSE:BABA) as its most consequential capital allocation decision. Here is what they had to say:

“The most consequential capital allocation decision in the first half-year was to increase our investment China by purchasing a new position in Alibaba.

I wrote about China in my 2019 half-year letter but given the heightened pessimism in the West today around China, I thought it was worth updating you on my thinking before getting to the discussion of our new investment in Alibaba.

I am conscious that the segue from a discussion on humility to one on China may be jarring. There are, for sure, many people better placed than me to discuss China. I hope, though, that there is value in the perspective of an informed outsider who has invested through several market panics in the past.

What Just Happened?

Over recent months, there has been a growing sense of pessimism bordering on panic about China and its internet companies. From peak in February to trough, aggregate paper losses of the largest Chinese Internet stocks have exceeded US$ 1 trillion.

The roots of the panic can be traced back to last November. Jack Ma, Alibaba’s iconic founder and major shareholder in Ant Group, gave a speech which was critical of financial regulation in China. Shortly afterwards, Ant Group withdrew its IPO plan, giving rise to fears that the Chinese government was turning its back on the market economy. Since then, regulation has spread to other sectors and increased in both frequency and intensity, heightening these fears…” (Click here to see the full text)

4. Alphabet Inc. (NASDAQ:GOOG)

Tepper’s Stake Value: $365.9 million

Percentage of David Tepper’s 13F Portfolio: 7.57%

Number of Hedge Fund Holders: 155

Alphabet Inc. (NASDAQ:GOOG) is a multinational conglomerate that owns and operates several internet-based platforms. Ranked fourth on the list of the 10 tech stocks to buy according to billionaire David Tepper, Alphabet Inc. (NASDAQ:GOOG) has a market capitalization of $1.82 trillion.

On July 27, Alphabet Inc. (NASDAQ:GOOG) issued its quarterly earnings report for the second quarter of 2021, with reported EPS at $27.26, crossing estimates of $19.10 by $8.16. Additionally, the company also reported revenues of $61.88 billion, beating market predictions by $5.80 billion.

According to the recent 13F Filings, Appaloosa Management holds 146,000 shares of Alphabet Inc. (NASDAQ:GOOG), amounting to $395.9 million in worth and accounting for 7.57% of the fund’s investment portfolio. As of the second quarter of 2021, 155 hedge funds tracked by Insider Monkey have positions in Alphabet Inc. (NASDAQ:GOOG), worth over $33.7 billion, compared to 159 in the first quarter, worth $29 billion.

On September 17, Jefferies analyst Brent Thill raised the firm’s price target on Alphabet Inc. (NASDAQ:GOOG) to $3,325 from $3,150 and kept a Buy rating on the shares.

In the Q2 2021 investor letter of Mawer Investment Management, the fund mentioned Alphabet Inc. (NASDAQ:GOOG) among the higher growth companies that reported strong results in the quarter. Here is what the fund said:

“Many higher growth companies reported strong results amid the pick-up in broad economic activity including Alphabet. These higher growth companies tend to have increased sensitivity to a change in discount rates and were supported as long-term interest rates stabilized over the period.”

3. Facebook, Inc. (NASDAQ:FB)

Tepper’s Stake Value: $418.9 million

Percentage of David Tepper’s 13F Portfolio: 8.67%

Number of Hedge Fund Holders: 266

Facebook, Inc. (NASDAQ:FB) is a multinational social networking services company based in Menlo Park, California. The tech giant is ranked third on the list of the 10 tech stocks to buy according to billionaire David Tepper.

David Tepper’s hedge fund presently holds 1.2 million shares in Facebook, Inc. (NASDAQ:FB), amounting to $418.9 million in worth and accounting for 8.67% of the fund’s portfolio. At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Facebook, Inc. (NASDAQ:FB), compared to 257 in the previous quarter’s worth $40 billion.

In the second quarter of 2021, Facebook, Inc. (NASDAQ:FB) reported EPS of $3.61, beating the estimated EPS by $0.58. Facebook, Inc. (NASDAQ:FB) also reported revenues amounting to $29.08 billion, surpassing market predictions by $1.19 billion.

On September 9, HSBC analyst Nicolas Cote-Colisson raised his price target on Facebook, Inc. (NASDAQ:FB) from $275 to $300 and kept a “Reduce” rating on the shares.

First Eagle Investment Management, an investment management firm, in its Q2 2021 investor letter, stated that Facebook, Inc. (NASDAQ:FB) was among the leading contributors in the fund for the quarter. Here is what the fund said:

“Leading contributors in the First Eagle Global Fund this quarter included Facebook, Inc. Class A. Facebook has continued to post impressive results for both revenue and active users of its traditional platforms. In the meantime, the social media giant continues to make progress on new initiatives—like Facebook Horizon (virtual reality) and Facebook Shops (e-commerce)—and maintains attractive monetization optionality around services like Messenger and WhatsApp.”

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

Tepper’s Stake Value: $430 million

Percentage of David Tepper’s 13F Portfolio: 8.89%

Number of Hedge Fund Holders:271

Amazon.com, Inc. (NASDAQ:AMZN) is a multinational company that specializes in e-commerce, cloud computing, digital streaming and artificial intelligence. The e-commerce corporation is ranked second of the list of the 10 tech stocks to buy according to billionaire David Tepper.

Amazon.com, Inc. (NASDAQ:AMZN) last released its earnings report on July 28, 2021, with reported earnings per share at $15.12, beating estimates of $12.22. The company also reported revenues of $113.08 billion, falling short of the estimated revenues by $2.01 billion. Earnings for the e-commerce giant are expected to grow by 29.57% in the coming year.

Appaloosa Management currently holds 125,000 shares of Amazon.com, Inc. (NASDAQ:AMZN), amounting to over $212.2 million in worth and accounting for 17.3% of the fund’s portfolio. There were 271 hedge funds in our database that held stakes in Amazon.com, Inc. (NASDAQ:AMZN) worth $60.49 billion in the second quarter of 2021, compared to 243 funds in the first quarter with total stakes amounting to approximately $50.4 billion.

On September 30, RBC Capital analyst Brad Erickson initiated coverage of Amazon.com, Inc. (NASDAQ:AMZN) with an Outperform rating and $4,150 price target, noting that the stock is a favorite among the internet stocks involved with e-commerce.

In the Q2 2021 investor letter of L1 Capital, the fund announced Amazon.com, Inc. (NASDAQ:AMZN) as one of its leading contributors. Here is what the fund said:

“Amazon flipped from being the largest detractor from portfolio performance in the March 2021 quarter, to one of the leading contributors in the June 2021 quarter. We took advantage of negative near-term sentiment in the March 2021 quarter to add to our Amazon investment. We continue to view Amazon as one of the best positioned businesses globally, with its share price still not reflecting fair value.”

1. Micron Technology, Inc. (NASDAQ:MU)

Tepper’s Stake Value: $480.3 million

Percentage of David Tepper’s 13F Portfolio: 9.94%

Number of Hedge Fund Holders: 87

Micron Technology, Inc. (NASDAQ:MU) is a technology company based in Idaho that engages in the design and production of innovative memory and storage solutions. Ranked first on the list of the 10 tech stocks to buy according to billionaire David Tepper, Micron Technology, Inc. (NASDAQ:MU) has a market capitalization of $79.92 billion.

According to the recent 13F Filings, David Tepper’s Appaloosa Management holds 5.65 million shares of Micron Technology, Inc. (NASDAQ:MU), worth $480.3 million and representing 9.94% of the fund’s portfolio. At the end of the second quarter of 2021, 87 hedge funds in the database of Insider Monkey held stakes worth $6.3 billion in Micron Technology (NASDAQ:MU), down from 100 in the preceding quarter worth $7.6 billion.

On September 27, Raymond James analyst Chris Caso lowered the firm’s price target on Micron Technology, Inc. (NASDAQ:MU) to $100 from $120 and kept a Strong Buy rating on the shares.

In its Q1 2021 investor letter, Bonsai Partners, an asset management firm, highlighted Micron Technology (NASDAQ:MU)’s improving results for the quarter. Here is what the fund said:

“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.

With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.

As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.

While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.

The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”

You can also take a peek at 10 Cheap Dividend Kings with Over 2% Yield and 12 Best Semiconductor Stocks To Invest In Right Now.

We may use your email to send marketing emails about our services. Click here to read our privacy policy.

Follow Insider Monkey on Twitter

10 Tech Stocks to Buy According to Billionaire David Tepper

Published on October 12, 2021 at 9:59 am by Sheryar Siddiq in Hedge Funds, News