Billionaire hedge fund manager David Tepper of Appaloosa Management is widely regarded as one of the world’s top investors, and he is not shy about making concentrated bets.
At the end of the second quarter, Tepper had a remarkable 40% of his portfolio concentrated in just three AI-related stocks: Amazon (NASDAQ: AMZN), Micron (NASDAQ: MU), and Taiwan Semiconductor Manufacturing (NYSE: TSM).
Amazon represents Tepper’s largest single holding, accounting for more than 15% of his total portfolio, with the billionaire adding to his position during Q2.
Amazon Web Services (AWS) is the company’s most profitable and fastest-growing business segment, with growth continuing to accelerate heading into the second half of 2026.
Amazon is investing heavily in AI infrastructure to sustain that momentum, and it gets a quick two- to three-year payback on its chip and networking investments while locking in deals for five or more years.
With a $496 billion backlog and the company projecting that AWS could become a $1 trillion revenue business, Amazon has a long runway of cloud computing growth ahead.
Amazon’s e-commerce and high-margin sponsored advertising businesses are also performing strongly, with AI and robotics investments driving significant operating leverage across the company.
Micron is Tepper’s second-largest position, representing over 14% of his holdings, as the company rides a powerful memory supercycle driven by soaring demand for high-bandwidth memory (HBM).
HBM gets packaged with graphics processing units (GPUs) and other AI accelerators to improve performance, and supply remains tight while demand continues surging with no near-term relief in sight.
Micron’s Korean competitors, SK Hynix and Samsung, have shifted focus toward increasing HBM supply, which has caused ordinary DRAM and NAND flash prices to surge even higher than HBM prices, benefiting Micron’s revenue mix.
Competition between HBM and advanced logic chips for scarce EUV machine supply, combined with HBM requiring significantly more wafer capacity than regular DRAM, is expected to keep the memory market imbalanced for years to come.
With a forward price-to-earnings ratio below 6.5 times and the supercycle showing unusual staying power compared to historical cycles, Micron’s stock presents a compelling valuation case for investors.
Taiwan Semiconductor Manufacturing rounds out Tepper’s three largest holdings at over 10% of his portfolio, with the billionaire aggressively increasing his position by about 24% during the second quarter.
TSMC has established a near-monopoly in advanced chip manufacturing through its technological expertise and scale, as it remains the only foundry to reliably produce the most advanced chips at high yields with few defects.
That manufacturing dominance has translated into strong pricing power and has made TSMC inextricably tied to its customers’ chip roadmaps, giving the company exceptional long-term revenue visibility.
TSMC benefits broadly from the surge in demand across all chip types, whether GPUs, custom AI ASICs (application-specific integrated circuits), or advanced central processing units (CPUs).
With shares pulling back since the end of June, all three of Tepper’s core AI positions offer investors entry points worth serious consideration given the structural tailwinds driving each business forward.
