Billionaire David Tepper Just Made a Big Bet. Should You Follow His Lead?
Key Points
Billionaire David Tepper runs Appaloosa Management.
Amazon stock has surged some 35% since early February.
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Appaloosa Management, a hedge fund owned by billionaire David Tepper, just made a big bet on Amazon (NASDAQ: AMZN). Tepper doubled the fund's stake in the e-commerce and cloud computing giant in the first quarter, according to Securities and Exchange Commission filings. The billionaire boosted his stake by 7.9%, adding 2.14 million shares of Amazon to the Appaloosa portfolio.
Amazon is now the largest position in the Appaloosa hedge fund, representing about 15.2% of the portfolio. That's up from 7.3% on Dec. 31, 2025. Appaloosa now owns 4.3 million shares of Amazon, valued at roughly $900 milion.
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Amazon is by far the largest holding in the fund, well ahead of Micron Technology at 9.6% and Alphabet at 8.4%.
Should you also bet on Amazon?
The big buy by Tepper comes after he trimmed his position in Amazon slightly in Q4, from about 7.4% to 7.2%. That was likely a case of profit-taking after Amazon stock surged to over $254 per share in November, up about 16% for the year at the time.
Tepper's first-quarter buy likely came on the dip, as Amazon stock fell below $200 per share in February during the Q1 tech sell-off. Amazon's valuation sank to near the lowest level in 15 years in February, likely prompting the big Tepper buy. Since then, Amazon's share price has surged 35% to $268 per share.
Amazon is no longer as cheap as it was in February, trading at 32 times earnings, but it's still in the buy zone. Amazon had a strong first quarter, crushing estimates, and the Q2 outlook calls for 16%-19% year-over-year sales growth and operating income growth of 15% at the midpoint. Its cloud computing revenue soared 28% in Q1, and the company has made big capex investments to capitalize on that demand.
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Dave Kovaleski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, and Micron Technology. The Motley Fool has a disclosure policy.
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