David Tepper Exits Nvidia and AMD, Shifts Focus to Broadcom in AI Race

Billionaire David Tepper, the chief of Appaloosa Management, is making significant moves in the artificial intelligence (AI) market. Despite the robust demand for AI hardware, Tepper has sold 97% of Appaloosa's stake in Nvidia and completely divested from Advanced Micro Devices (AMD). Instead, he has opened a position in Broadcom, a leading AI-networking specialist.

The AI Revolution: A Billionaire's Perspective

More than 30 years ago, the internet revolutionized corporate America, and now the evolution of AI is poised to be the next game-changing trend. According to PwC, global GDP is expected to increase by 26% by 2030 due to AI advancements. Businesses are investing heavily in AI hardware and solutions to gain a competitive edge.

Appaloosa's Exit from Nvidia and AMD

Despite the strong performance of Nvidia and AMD, Tepper has significantly reduced his fund's exposure to these companies. As of March 31, 2025, Appaloosa's stake in Nvidia had shrunk from 10.2 million split-adjusted shares to just 300,000 shares. Meanwhile, Tepper's position in AMD was whittled down from 2.31 million shares to zero.

Reasons for the Sell-Off

**Locking in Gains**: Nvidia and AMD shares surged due to the AI hype, and Tepper may have cashed in on these gains.
**Regulatory Issues**: Both the Biden and Trump administrations have imposed export restrictions on advanced AI chips to China, the world's second-largest economy, which could impact sales and margins.
**Increasing Competition**: As more players enter the AI-GPU market, the scarcity of these chips is expected to decrease, reducing pricing power.
**Potential AI Bubble**: There is a risk that the AI market could experience a bubble similar to other technological revolutions, which could negatively affect hardware providers.

Tepper's New Focus: Broadcom

While Tepper has been reducing his exposure to AI-GPU providers, he has opened a 130,000-share position in Broadcom. Broadcom is one of the few companies to achieve a $1 trillion valuation, thanks to its integral role in connecting large numbers of GPUs to maximize compute capabilities and minimize tail latency.

Broadcom's AI Potential

Broadcom's AI-related revenue is projected to grow from $12.2 billion in fiscal 2024 to between $60 billion and $90 billion by fiscal 2027. The company's diversified operations, including wireless chips for smartphones and cybersecurity solutions, make it a more resilient investment in case the AI bubble bursts.

Navigating the AI Landscape

Broadcom's recent $69 billion acquisition of VMware has further solidified its position as a major infrastructure technology player. This strategic move positions Broadcom to better serve businesses managing applications across private and hybrid clouds.

If the AI bubble were to burst, Broadcom is expected to navigate the challenging environment for tech stocks more effectively than Nvidia or AMD, thanks to its diversified portfolio and strong market presence.