Tepper Cautions Against Nvidia Stock Investment

David Tepper, the founder of Appaloosa Management, expressed caution regarding the purchase of Nvidia (NASDAQ:NVDA) stock due to uncertainty in the long-term growth prospects of artificial intelligence.

In an interview on CNBC’s “Squawk Box,” Tepper noted that while Nvidia’s stock appears attractive, he is hesitant to invest further in the chipmaker. He stated, “We sold a lot of our Nvidia. We thought it was too high at the time and would come down. Unfortunately, we didn’t buy it when it came back down.”

By the end of June, Tepper had reduced his Nvidia holdings by over 80%, downsizing his stake to approximately $85 million.

Although Tepper acknowledges Nvidia’s potential upside as a leader in the AI sector, he raises concerns about the sustainability of demand. He questioned, “Do you have enough power for the growth? Do you have the next generation models that can take their chip?”

Nvidia has skyrocketed in value, experiencing nearly 200% growth over the past year and more than 157% this year alone, with a current market cap exceeding $3 trillion. Despite this, Tepper remains unsure about the company’s ability to sustain such growth beyond 2026, saying, “Different things have to happen to make the growth projections happen.”

He emphasized his uncertainty regarding the unpredictable effects of AI on earnings, stating, “The variation of where that earnings can be is too much. So it’s not my preferred vehicle.”