Appaloosa’s David Tepper explains why he’s not buying Nvidia on the dip here

Appaloosa Management’s David Tepper said he is hesitant in buying more shares of the red-hot chipmaker Nvidia even though the stock looks attractive to him. “We sold a lot of our Nvidia. We thought [the stock] was too high at the time and would come down. Unfortunately, we didn’t buy it when it came back down,” Tepper said on CNBC’s ” Squawk Box ” Thursday. “Those stocks like Nvidia is a question. Do you have enough power for the growth? Do you have the next generation models that can take their chip?” The hedge fund manager dumped more than 80% of his Nvidia holding in the second quarter, cutting his stake to about $85 million at the end of June. The billionaire investor said there could still be some upside to artificial intelligence beneficiaries like Nvidia, but he’s uncertain about the long-term prospect of AI demand and if it can be a meaningful contributor to the economy. NVDA 1Y mountain Nvidia Tepper said he does kind of like the stock at these levels, but investors have to believe in a long-term growth story to be big buyers here. “As you go out years, different things that have to happen to make the growth projections happen,” he said. “I’m not saying it won’t happen. I’m just not smart enough to know if they will.” Chip stocks have been rising on optimism that the AI boom will require companies to buy more semiconductors and memory to keep up with rising computational requirements for AI applications. Nvidia emerged as the biggest AI winner by far. After skyrocketing 238% in 2023, the stock has gained another 150%, topping a $3 trillion market cap. Although the stock remains 12% off its all-time high reached in June. Tepper said he can’t effectively estimate where Nvidia’s earnings will be in 2026 and beyond because the AI story is too fluid and that’s causing him some hesitation. “You have these multiples out there and how it can go, and the variation of where that earnings can be…. is too much. So it’s not my preferred vehicle versus other things that I have more confidence in,” Tepper said.