Wall Street mogul Tepper bets on AI: Micron holdings surge by 200%, new purchase of Korean ETF
Hedge fund mogul Tepper precisely targeted the AI chip sector in the fourth quarter of last year, investing over $600 million heavily in Micron Technology and the South Korean chip ETF, and has already achieved about 30% returns this year. The global memory shortage combined with the AI computing power frenzy has created a stark contrast between his chip bets and the plummeting software stocks
David Tepper of Appaloosa Management made a significant bet on artificial intelligence-related investments in the fourth quarter of last year, substantially increasing his position in Micron Technology and establishing a new position in Korean stocks, both of which have performed strongly this year.
The billionaire hedge fund manager raised his stake in Micron Technology to $428 million, a 200% increase, making the key memory chip manufacturer for AI systems the fund's fourth-largest holding, according to InsiderScore data. The global memory shortage has driven Micron's stock price up nearly 30% this year.
Meanwhile, Tepper established a new position worth $182.3 million in the iShares MSCI Korea ETF (EWY). This ETF primarily holds chip giants like Samsung Electronics and SK Hynix, which have surged 34% this year and recently hit a new high, attracting investors seeking overseas beneficiaries of AI.
The strong performance of these chip-related investments stands in stark contrast to other sectors of the market. Software stocks have significantly declined this year, as investors worry that the latest AI models will impact the industry's reliance on high-fee business models.
Increasing Bets on Memory Chips
Tepper's investment in Micron Technology demonstrates strong confidence in AI infrastructure. In addition to raising his stock position to $428 million, he also purchased $71.4 million in nominal value of Micron call options. However, it is currently unclear whether he has sold these contracts or when they expire.
The global memory shortage has been a key factor driving Micron's stock price surge. As a major producer of computer memory required for AI systems, Micron directly benefits from the surge in demand brought about by the AI boom.
Targeting Korean Chip Leaders
Tepper's investment in the Korean ETF provides him with exposure to Samsung Electronics and SK Hynix, which dominate the ETF's holdings. Investors are looking overseas for beneficiaries of the AI supply chain, leading to increased interest in Korean chip manufacturers.
The 34% increase in this ETF this year reflects the market's recognition of the role of Asian chip manufacturers in the AI wave. This performance contrasts with the weakness of U.S. tech stocks.
Other Major Holding Adjustments
Alibaba remains Appaloosa's top holding, although Tepper reduced his stake by 20% in the fourth quarter. The Chinese internet giant has risen 6% this year.
Alphabet is the fund's second-largest holding, with Tepper increasing his stake by about 29%. However, Alphabet has underperformed this year, weighed down by overall pressure on the tech sector These portfolio adjustments indicate that Tepper is reallocating assets from traditional tech stocks to chip manufacturers that directly benefit from AI infrastructure development
