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Billionaire David Tepper’s 5 Small and Midcap Stock Picks with Huge Upside Potential

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In this article, we will list Billionaire David Tepper’s 5 small and midcap stock picks with huge upside potential. Please visit Billionaire David Tepper’s 10 Small and Midcap Stock Picks with Huge Upside Potential if you would like to see the extended list and the methodology behind it.

5. Mohawk Industries, Inc. (NYSE:MHK)

Appaloosa Management LP’s Stake: $74 Million  

David Tepper of Appaloosa Management LP has had a long term bet on Mohawk Industries, Inc. (NYSE:MHK) stock. The firm first appeared in 13F filings for the fund in the second quarter of 2014. Back then, this position comprised just over 500,000 shares. The fund increased this to around 760,000 shares by the second quarter of 2016. Thereafter, this stake was trimmed and sold off completely by early 2018. A new position in the company was opened in the second quarter of 2025. This stake comprised just 65,000 shares. In the third quarter of 2025, this was increased by 148% to 161,000 shares. Filings for the fourth quarter of 2025 show that the fund owns 675,000 shares in the company, up 317% compared to the previous quarter.

READ NEXT: Billionaire Ken Fisher’s 15 Most Notable Moves for 2026.

Hedge funds like Mohawk Industries, Inc. (NYSE:MHK) stock for a number of reasons. One of these is that the firm is trading well below its intrinsic value. In recent years, the stock has traded at a significant discount to its book value (Price-to-Book around 0.72x). Hedge funds often view a P/B ratio under 1 for a market leader as a strong margin of safety. Institutional investors are also betting on Mohawk’s aggressive internal restructuring. The company has implemented strategic initiatives expected to yield an additional $100 million in EBITDA by 2026. Despite declining volumes in the broader flooring industry, Mohawk has managed to increase its adjusted EBIT margins through better price/mix strategies and productivity improvements.

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The $250 Trillion AI Hype is Real. A few years from now, you’ll probably wish you’d bought this stock.

When Jeff Bezos said that one breakthrough technology would shape Amazon’s destiny, even Wall Street’s biggest analysts were caught off guard.

Fast forward a year and Amazon’s new CEO Andy Jassy described generative AI as a “once-in-a-lifetime” technology that is already being used across Amazon to reinvent customer experiences.

At the 8th Future Investment Initiative conference, Elon Musk predicted that by 2040 there would be at least 10 billion humanoid robots, with each priced between $20,000 and $25,000.

Do the math. According to Musk, this technology could be worth $250 trillion by 2040.

Put another way, that’s roughly equal to:

  • 175 Teslas
  • 107 Amazons
  • 140 Metas
  • 84 Googles
  • 65 Microsofts
  • And 55 Nvidias

And here’s the wild part — this $250 trillion wave isn’t tied to one company, but to an entire ecosystem of AI innovators set to reshape the global economy.

It’s a leap so massive, it could reshape how businesses, governments, and consumers operate worldwide.

Even if that $250 trillion figure sounds ambitious, major firms like PwC and McKinsey still see AI unlocking multi-trillion-dollar potential.

How could anything be worth that much?

The answer lies in a breakthrough so powerful it’s redefining how humanity works, learns, and creates.

And this breakthrough has already set off a frenzy among hedge funds and Wall Street’s top investors.

What most investors don’t realize is that one under-owned company holds the key to this $250 trillion revolution.

In fact, Verge argues this company’s supercheap AI technology should concern rivals.

Before I reveal the details, let’s talk about how some of the richest people on the planet are positioning themselves.

  • Bill Gates sees artificial intelligence as the “biggest technological advance in my lifetime,” more transformative than the internet or personal computer, capable of improving healthcare, education, and addressing climate change.
  • Larry Ellison — through Oracle, is spending billions on Nvidia chips and partnering with Cohere to embed generative AI across Oracle’s cloud and apps.
  • Warren Buffett — not known for tech hype — says this breakthrough could have a ‘hugely beneficial social impact.

When billionaires from Silicon Valley to Wall Street line up behind the same idea — you know it’s worth paying attention to.

Even as we admire what Tesla, Nvidia, Alphabet, and Microsoft have built, we believe an even greater opportunity lies elsewhere…

But the real story isn’t Nvidia — it’s a much smaller company quietly improving the critical technology that makes this entire revolution possible.

And judging by what I’m hearing from both Silicon Valley insiders and Wall Street veterans…

This prediction might not be bold at all:

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