In this article, we will take a look at Billionaire David Tepper’s Investment Strategy and 10 Favorite Stocks.
David Tepper undoubtedly ranks among hedge fund legends, having founded Appaloosa Management in 1993 to become one of the world’s wealthiest people. These days, the billionaire is known to the public for owning several sports franchises, notably the Carolina Panthers of the National Football League and Charlotte FC of Major League Soccer. While the media has been focusing on his sporting endeavors lately, Appaloosa Management has been operating efficiently in the background.
Tepper took a unique approach at Appaloosa, deliberately seeking out distressed companies and betting on successful recoveries when other investors had given up on them. The foundation for his approach was laid by his first investment in the bankruptcy-ridden Algoma Steel. In the years that followed, Appaloosa continued to deliver exceptional returns by focusing on the debt of struggling companies such as Williams Corporation and Marconi.
The billionaire achieved exceptional long-term success despite the instability that occasionally resulted from his aggressive approach. Appaloosa generated average annual gains of about 25% between 1993 and 2024, considerably higher than the broader market.
More recently, Appaloosa’s Q3 2025 13F shows a portfolio executing a conviction-based rotation rather than a broad, conservative retreat. David Tepper focused on cyclicals and China exposure while carefully reducing mega-cap winners, indicating a trend toward lopsided mean-reversion potential. This adjustment also shows Tepper is moving away from several AI stocks, in tandem with other prominent hedge fund managers such as Michael Burry and Ray Dalio. Both of these market giants have warned about excessive valuations and the possibility of an AI bubble.
Our Methodology
To curate our list of David Tepper’s favorite stocks, we scanned Appaloosa Management’s Q3 2025 filings, using Insider Monkey’s 13F database. We then ranked these stocks by the value of Fisher Asset Management’s stake in each stock, in ascending order. We have also mentioned the number of hedge fund holders for each stock using Insider Monkey’s database of hedge funds as of Q3 2025.
We have added the performance of each stock from the end of September 2025 through February 13, 2026, providing readers with insight into how Appaloosa Management’s portfolio picks have performed during this period.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
10. Caesars Entertainment Inc. (NASDAQ:CZR)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): -27.44%
Appaloosa Management’s Stake Value: $56.7 million
Number of Hedge Fund Holders: 71
Caesars Entertainment Inc. (NASDAQ:CZR) ranks among billionaire David Tepper’s 10 favorite stocks. On January 21, TD Cowen cut its price target for Caesars Entertainment Inc. (NASDAQ:CZR) to $35 from $40 while retaining a Buy rating on the company’s shares. The firm highlighted a weaker near-term outlook, particularly in Las Vegas, and anticipates “some turbulence” when Caesars reports fourth-quarter 2025 earnings.
TD Cowen decreased its Q4 2025 and fiscal year 2026 forecasts due to inconsistent visiting trends and increased volatility in Digital Hold, resulting in a lower sum-of-the-parts price target. Regardless of the short-term issues, the firm is “constructive on longer-term fundamentals” for the casino operator.
Meanwhile, Susquehanna raised Caesars Entertainment Inc. (NASDAQ:CZR) from Neutral to Positive on January 8, citing a “attractive risk/reward set-up” for the casino company.
Susquehanna stated that, although Caesars still has “strategic gaps” compared to higher-end offerings from peers, the company’s status as “largely the lowest-cost operator” with strong financial leverage could result in major stock gains if the expected positive trend inflection takes place.
Caesars Entertainment Inc. (NASDAQ:CZR) operates as a gaming and hospitality company. The company owns, leases, brands, or manages domestic properties in 18 states that offer slot machines, video lottery terminals, e-tables, hotel rooms, and table games, including poker.
9. RTX Corporation (NYSE:RTX)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 51.03%
Appaloosa Management’s Stake Value: $85.2 million
Number of Hedge Fund Holders: 76
RTX Corporation (NYSE:RTX) ranks among billionaire David Tepper’s 10 favorite stocks. On February 4, Wolfe Research reaffirmed its Outperform rating and $235 price target for RTX Corporation (NYSE:RTX) after the company reached a framework deal to increase missile manufacturing in pursuit of the Pentagon’s goal to improve the defense industry’s capabilities.
The SM-3IB missile program, which Wolfe Research reports was “on the chopping block by the current administration” only a year ago, may see plans to triple production as part of the arrangement.
According to the firm, RTX’s Raytheon division might see an additional revenue boost of roughly $7-8 billion from the manufacturing build-out, which would represent a 25% implied growth in contrast to the 2025 run-rate. The segment’s current 6% compound annual growth rate may also experience “a couple percent upside pressure” as a result.
RTX Corporation (NYSE:RTX) is a global aerospace and defense company that designs, manufactures, and services advanced systems, engines, and solutions for defense, commercial, and government customers. It focuses on connecting and protecting the world through innovations in areas such as missiles, aircraft engines, sensors, cybersecurity, and space technology.
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 101.79%
Appaloosa Management’s Stake Value: $153.7 million
Number of Hedge Fund Holders: 115
Advanced Micro Devices, Inc. (NASDAQ:AMD) ranks among billionaire David Tepper’s 10 favorite stocks. On February 4, Benchmark reaffirmed its Buy rating and $325 price target for Advanced Micro Devices, Inc. (NASDAQ:AMD), citing the company’s growing prominence in the AI industry. Analyst Cody Acree was optimistic about AMD’s “strong record results” and “attractive outlook,” citing the company’s “rapidly growing leverage to the aggressively expanding AI Data Center market” spanning both CPU and GPU segments.
The firm noted that Advanced Micro Devices, Inc. (NASDAQ:AMD) hopes to generate “tens of billions of annual AI revenue in 2027,” adding that the OpenAI partnership alone may provide “well over $100 billion of revenue potential over the next few years.”
Benchmark stressed that clients are “eager for a viable alternative to Nvidia’s dominant, but proprietary and closed architecture,” especially considering what the firm characterized as “the incumbent’s ongoing challenges to fully satisfy the market’s ever increasing demand.”
Advanced Micro Devices, Inc. (NASDAQ:AMD) designs and builds high-performance computing, graphics, and AI technologies used across data centers, PCs, and emerging AI workloads.
7. JD.com, Inc. (NASDAQ:JD)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 34.00%
Appaloosa Management’s Stake Value: $217.7 million
Number of Hedge Fund Holders: 55
JD.com, Inc. (NASDAQ:JD) ranks among billionaire David Tepper’s 10 favorite stocks. On January 26, BofA Securities lowered its price target for JD.com, Inc. (NASDAQ:JD) to $36 from $38, but maintained a Buy rating on the e-commerce giant. The revision came as BofA analyst Joyce Ju issued projections for JD.com’s fourth-quarter 2025 earnings report, with total revenue forecast at RMB356 billion, a 2.6% year-over-year increase, and in line with consensus.
In terms of profitability, the firm forecasts JD Retail’s operating profit of RMB7.8 billion, a 22% year-over-year fall due to significant Singles Day subsidies, particularly in the home appliances sector.
According to BofA, JD.com’s group non-GAAP net profit would amount to RMB0.9 billion, above the street’s forecast of RMB0.6 billion, with losses coming from new initiatives likely to fall to RMB14.9 billion from RMB15.7 billion in Q3.
JD.com, Inc. (NASDAQ:JD) is one of China’s largest e-commerce and technology companies. It operates an extensive online retail platform supported by advanced logistics, supply chain management, and cloud services.
6. Uber Technologies, Inc. (NYSE:UBER)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 3.94%
Appaloosa Management’s Stake Value: $235.8 million
Number of Hedge Fund Holders: 143
Uber Technologies, Inc. (NYSE:UBER) ranks among billionaire David Tepper’s 10 favorite stocks. On February 5, Susquehanna reaffirmed its Positive rating on Uber Technologies, Inc. (NYSE:UBER) and maintained a $110 price target on the company’s shares. The firm stated that Uber Technologies, Inc. (NYSE:UBER) had “a solid quarter overall” in the fourth quarter, with most vital performance measures exceeding forecasts.
The company reported earnings per share of $0.71, which fell short of the expected $0.80. On the other hand, revenue exceeded forecasts, coming in at $14.4 billion, compared with a forecast of $14.32 billion.
Meanwhile, Uber’s first-quarter gross bookings outlook surpassed the consensus forecast by 3% at the midpoint, while its EBITDA forecast was in line with estimates. Management stated that US mobility trips and gross bookings are also likely to increase in 2026.
Susquehanna emphasized management’s remarks on “continued progress with AVs,” citing upcoming deployments and highlighting opportunities in this area.
Uber Technologies, Inc. (NYSE:UBER) is a prominent global supplier of ride-hailing, food delivery, and freight services. Since its inception, the company has revolutionized urban transportation by connecting drivers and passengers through its mobile app.
5. Microsoft Corporation (NASDAQ:MSFT)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 25.93%
Appaloosa Management’s Stake Value: $239.5 million
Number of Hedge Fund Holders: 312
Microsoft Corporation (NASDAQ:MSFT) ranks among billionaire David Tepper’s 10 favorite stocks. Microsoft Corporation (NASDAQ:MSFT) reported its fiscal Q2 2026 earnings on January 28, with total revenue up 17%, driven by strong demand for its cloud services and AI programs. On an adjusted basis, profitability also exceeded expectations, with adjusted EPS of $4.14 versus the projected $3.92.
The company’s Intelligent Cloud revenue totaled $32.91 billion, exceeding forecasts of $32.39 billion, indicating continued demand for cloud services and enterprise workloads. Microsoft Corporation (NASDAQ:MSFT) also reported that Azure and other cloud revenue increased 38% on a constant-currency basis, which was precisely what the market had predicted.
Looking ahead, Microsoft Corporation (NASDAQ:MSFT) expects Q3 2026 revenue to be between $80.65 billion and $81.75 billion, representing a 15-17% increase. Meanwhile, Azure revenue is expected to increase by 37–38% in constant currency.
Microsoft Corporation (NASDAQ:MSFT) develops and sells a wide range of software, cloud services, devices, and business solutions, serving both individual users and enterprise customers worldwide.
4. Meta Platforms, Inc. (NASDAQ:META)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 11.00%
Appaloosa Management’s Stake Value: $271.7 million
Number of Hedge Fund Holders: 273
Meta Platforms, Inc. (NASDAQ:META) ranks among billionaire David Tepper’s 10 favorite stocks. On February 3, Meta Platforms, Inc. (NASDAQ:META) reported strong financial results for the fourth quarter of 2025, with earnings per share of $8.88 exceeding the projected $8.19. Meanwhile, revenue came in at $59.9 billion, exceeding the expected $58.35 billion. Record Christmas traffic and AI-driven gains in ad efficiency also accelerated the company’s top-line growth.
Despite a rise in AI infrastructure expenses, Meta’s free cash flow exceeded market forecasts. Moreover, management provided encouraging projections for the first quarter of 2026, reiterating that absolute operating profit in 2026 will exceed 2025 figures.
Meta Platforms, Inc. (NASDAQ:META) projects revenue for the first quarter of 2026 to fall between $53.5 billion and $56.5 billion. In addition, with capital expenditures projected at $115 billion to $135 billion, the company forecasts full-year 2026 expenses to be around $162 billion and $169 billion.
Meta Platforms, Inc. (NASDAQ:META) is a California-based company that develops social media applications. Dedicated to connecting people and growing businesses, the company has two segments: Family of Apps (FoA) and Reality Labs (RL).
3. NRG Energy, Inc. (NYSE:NRG)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 80.55%
Appaloosa Management’s Stake Value: $302.8 million
Number of Hedge Fund Holders: 73
NRG Energy, Inc. (NYSE:NRG) ranks among billionaire David Tepper’s 10 favorite stocks. On January 30, NRG Energy, Inc. (NYSE:NRG) finalized the purchase of several generation assets and CPower from LS Power. The arrangement expands NRG’s lineup with 18 natural gas-powered generation facilities totaling about 13 GW of capacity, in addition to CPower’s commercial and industrial virtual power plant system.
Following the deal, NRG Energy, Inc. (NYSE:NRG) revised its 2026 financial outlook to include adjusted net income of $1.685 billion-$2.115 billion and adjusted EPS of $7.90-$9.90. The company also reduced its earlier target ranges for adjusted EBITDA and free cash flow.
Moreover, the projection accounts for approximately 90% of the acquired portfolio’s full-year 2026 impact, taking into account the January 30 closure date.
NRG Energy, Inc. (NYSE:NRG) is a major integrated U.S. energy company that generates, sells, and delivers electricity and natural gas to homes and businesses, offering diverse power sources (coal, gas, renewables) and expanding into smart home/energy solutions through acquisitions such as Vivint.
2. Alphabet Inc. (NASDAQ:GOOGL)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 97.70%
Appaloosa Management’s Stake Value: $337.9 million
Number of Hedge Fund Holders: 243
Alphabet Inc. (NASDAQ:GOOGL) ranks among billionaire David Tepper’s 10 favorite stocks. Following the company’s solid fourth-quarter results, Canaccord Genuity raised its price target on Alphabet Inc. (NASDAQ:GOOGL) to $415 from $390 on February 5, maintaining a Buy rating on the shares. The tech giant announced total revenue that was about 2% higher than expected, owing to continued strength in the Search and Cloud divisions.
The Gemini app also displayed considerable growth in the fourth quarter, with more than 750 million monthly active users and greater engagement. Cloud revenue outperformed forecasts, increasing by 14 percentage points quarter-over-quarter, while backlog increased by 55% to $240 billion.
Gemini Enterprise, which launched just four months ago, has already raked in more than 8 million paid seats, illustrating the strong demand for Google Cloud’s TPUs and enterprise AI products.
Alphabet Inc. (NASDAQ:GOOGL) is a leading tech giant with a diverse portfolio, including Google Ads, Google Chrome, Google Cloud, Search, and YouTube, and holds a dominant position in each of these markets.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Share Price Performance (Mar 31, 2025 – Feb 13, 2026): 4.48%
Appaloosa Management’s Stake Value: $548.9 million
Number of Hedge Fund Holders: 332
Amazon.com, Inc. (NASDAQ:AMZN) ranks among billionaire David Tepper’s 10 favorite stocks. Benchmark reduced its price target for Amazon.com, Inc. (NASDAQ:AMZN) to $275 from $295 on February 6, but maintained a Buy rating on the tech giant. The drop follows Amazon’s recent earnings report, which included plans to invest $200 billion in capital expenditure this year, which is roughly $40 billion more than the market anticipated.
Despite a subdued overall reaction to the investment estimates, Benchmark noted that Amazon’s AWS cloud segment experienced 24% year-over-year growth and an increasing quarterly dollar contribution. The firm also reported considerable gains in key retail efficiency, with AWS margins staying strong.
Piper Sandler also lowered its price target for Amazon.com, Inc. (NASDAQ:AMZN) to $260 from $300, noting that Amazon “remains relentless on lowering cost to serve and working toward an AI product cycle,” implying that the company continues to prioritize efficiency while investing in AI capabilities.
Amazon.com, Inc. (NASDAQ:AMZN) is an American technology company that focuses on e-commerce, cloud computing, and other services, including digital streaming and artificial intelligence solutions.
While we acknowledge the potential of AMZN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than AMZN and that has 100x upside potential, check out our report about this cheapest AI stock.
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