Alibaba Group Holding Limited – ADR (NYSE:BABA) ranks 1st on our list of Top 10 AI Stocks for 2024 According to Billionaire David Tepper.
Billionaire David Tepper of Appaloosa Management recently made headlines when his latest portfolio showed the 66-year-old owner of Carolina Panthers was piling into Chinese stocks while clearly cutting his exposure to mega-cap tech stocks which have already rewarded him heftily over the past several quarters, thanks to the AI-led rally. Tepper’s bet on Chinese stocks comes at a time when many analysts are predicting a rebound of Chinese economy as the government begins to devise more rescue plans for the devastated property sector. The MSCI China index is up about 10% since the end of March.
David Tepper, who founded Appaloosa Management back in 1993, returned 20% last year, thanks to his huge stake in AI stocks. A cursory analysis of David Tepper, worth over $20 billion, shows that he was piling into AI stocks when they were just getting started. This wasn’t a fluke or a one-off success from the billionaire. Data from Bloomberg shows that Tepper has posted annualized returns of 28% for investors, before fees. In 2022, when markets were tumbling amid inflation storm and rising interest rates, Appaloosa returned 12.5%. Tepper’s instincts and grip over financial markets were strong even when he was in his late 20s and 30s, raking in huge profits for Goldman Sachs, which he’d joined in 1985.
Tepper rose to fame at Goldman when his portfolio stood out in the mist of the market crash of 1987. According to The Alpha Masters: Unlocking the Genius of the World’s Top Hedge Funds, written by Maneet Ahuja, Tepper recalled:
“Going into the crash I had set up my entire portfolio as just short—I had no long positions. I made a fortune during and after the crash,” he says with a chuckle. “It was very cool.” Unfortunately, the rest of the firm didn’t do as well. “I still got a raise but not as much as I should have.”
Alibaba Group Holding Limited – ADR (NYSE:BABA)
Billionaire David Tepper Q1’2024 Stake Value: $814,050,000
Alibaba is an AI play because of its Cloud platform, which is seeing triple-digit growth and latest quarterly results show AI-related revenue of Alibaba’s Cloud platform is increasing. The company recently cut prices of some of its AI services by up to 97%.
Billionaire David Tepper surprised everyone by boosting his stake in Alibaba Group Holding Limited – ADR (NYSE:BABA) by a whopping 159% in the first quarter. The billionaire now owns stake worth about $814 million in Alibaba Group Holding Limited – ADR (NYSE:BABA) that has struggled amid economic headwinds and regulatory crackdowns in China. However, some believe Alibaba Group Holding Limited – ADR (NYSE:BABA) is making a turnaround and now is the time to pile into the stock.
“The Cheapest Stock in the World”?
Jim Cramer recently highlighted Tepper’s huge stake in Alibaba Group Holding Limited – ADR (NYSE:BABA) in a program on CNBC, saying:
“I was talking to my buddy Dave Tepper, he’s got a huge position in Alibaba. He’s one of my thousand bosses I had at Goldman. And we both admit.. I mean this is one of the cheapest stocks.. it’s the cheapest stock in the world.”
Michael Burry also owns a significant stake in Alibaba Group Holding Limited – ADR (NYSE:BABA) as of the end of March this year.
Artisan Select Equity Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its fourth quarter 2023 investor letter:
“Pretty much all of our holdings rose during the quarter. Only one stock declined by more than a couple of percent—Alibaba Group Holding Limited (NYSE:BABA), which was down 9% for the quarter and 12% for the year. This investment continues to be a disappointment. We estimate the shares are trading at around 5X EBITA—a valuation normally reserved for a company with evaporating profits. While it’s true Alibaba is underperforming its peers in the market, the fact is it remains the market leader in its core businesses, and the business is still growing. In the most recent quarter, revenues grew 9% and profits grew 26%.It’s not evaporating.
The management seems to be making meaningful changes designed to enhance shareholder value, including structural changes to improve profitability and restore its competitive position. It is monetizing non-core assets and making improvements in capital allocation. A lot of good things are happening that are not yet recognized in the share price. There are reasons—primarily geopolitical—for this, but at the current valuation, we could easily see the shares double and they would still be cheap.”
Alibaba Group Holding Limited – ADR (NYSE:BABA) ranks 1st on our list of Top 10 AI Stocks for 2024 According to Billionaire David Tepper.
See full list by clicking 10 Best AI Stocks to Buy for 2024 According to Billionaire David Tepper.
If you are looking for an AI stock that is as promising as Microsoft 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.
