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David Tepper Shifts Investments in AI Chipmakers
Investment manager David Tepper, through his hedge fund Appaloosa Management, has sold his stakes in Nvidia and AMD and is moving towards Broadcom, a diversified chipmaker. This shift comes as he anticipates increasing competition in data centers where GPUs, traditionally dominant for AI applications, may face challenges from application-specific integrated circuits (ASICs). In the first quarter of 2023, Tepper reduced his Nvidia holdings to just 3% of his previous stake and sold all shares in AMD.
Broadcom, which provides ASICs and networking chips, is seen as a more stable choice due to its diversified offerings, which include an enterprise software segment. The company’s stock is currently trading at a forward earnings multiple close to 40, similar to Nvidia and slightly less than AMD. Tepper’s investments signal a potential pivot in the AI chip industry as companies like Meta and Google develop custom chips that may ultimately threaten the GPU market.
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