Billionaire David Tepper recently reduced his positions in these 5 Artificial Intelligence (AI) stocks. Should You Sell Them, Too?

Few hedge fund managers have dabbled in artificial intelligence (AI) as much as David Tepper. His Appaloosa fund’s portfolio has been invested in AI stocks for a long time.

However, the billionaire investor doesn’t seem as enamored with AI these days. Tepper lowered his positions in several AI stocks in the second quarter of 2024.

Tepper’s top five AI cuts in Q2

Each of Appaloosa’s top five features is heavily focused on AI. However, Tepper reduced his hedge fund positions in all of them in Q2.

He sold 750,000 shares of the Alibaba Group Holding (NYSE: BABA)reduces Appaloosa’s stake in the Chinese Internet company by about 6.7%. However, Alibaba remains the hedge fund’s largest position, accounting for about 12.2% of its portfolio.

Tepper cut the Appaloosa part Amazon (NASDAQ: AMZN) by 9.2% on his sale of 353,000 shares of the e-commerce and cloud services leader. However, this was not enough to knock Amazon from its position as the second largest hedge fund.

The billionaire investor sold more than 15.6% of his position at Microsoft (NASDAQ: MSFT). Despite this major reduction, the tech giant is still the third largest Appaloosa.

However Meta Platforms (NASDAQ: META) held its No. 4 among the largest Appaloosa positions, the hedge fund has very little money in the social media and metaverse company right now. Tepper disposed of more than 15.6% of Appaloosa’s stake in Meta in Q2.

He also sold 150,000 shares of Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL)reducing Appaloosa’s stake in parent Google by more than 7.2%. However, the sales transactions did not cause Alphabet to lose its place as the fifth largest hedge fund.

Why is Tepper selling these AI stocks?

Tepper has not publicly explained why he decided to reduce Appaloosa’s position on its top AI stocks. All we can do is guess his feelings.

It’s surprising that the hedge fund manager didn’t limit his sales to just one or two AI stocks. Tepper shorted Appaloosa’s stakes in Alibaba, Amazon, Microsoft, Meta, and Alphabet, as well as several other AI stocks.

However, he did not throw in the towel on AI stocks. For example, Tepper increased his hedge fund positions to Adobe and ASML Holdings.

Maybe he was concerned about premium rates in some cases. However, that cannot be true in general. Alibaba, for example, trades at a low price-to-earnings ratio of 9.4. Alphabet and Meta stocks don’t look overpriced based on their price-to-earnings-to-growth (PEG) multiples. Also, some of the products that Tepper bought in Q2 have higher values ​​than others that he sold.

The story continues

Perhaps the best theory for why Tepper reduced his positions in most of these five AI stocks is that he wanted to take some profit off the table. With the exception of Alibaba, all the other top AI stocks in Appaloosa’s portfolio had a solid year to date in Q2.

Should you sell them, too?

Every investor has his own goals to consider when buying and selling stocks. Just because a famous investor like Tepper is selling his biggest AI asset doesn’t mean you have to follow suit.

Alibaba should have good long-term prospects for providing cloud AI services in China. It’s a similar story for Amazon, Alphabet, and Microsoft in the US, Europe, and other key markets.

Meta is using AI to increase the revenue performance of its social media apps and could have a huge potential in the AI ​​business arena. I think all of the top five AI Tepper products sold in Q2 would be attractive buying options for many long-term investors.

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Suzanne Frey, CEO of Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of CEO of Meta Platforms Mark Zuckerberg, is a member of the board of directors of The Motley Fool. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Keith Speights holds positions at Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool ranks and recommends ASML, Adobe, Alphabet, Amazon, Meta Platforms, and Microsoft. The Motley Fool recommends the Alibaba group and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a publicity strategy.

Billionaire David Tepper recently reduced his positions in these 5 Artificial Intelligence (AI) stocks. Should You Sell Them, Too? was originally published by The Motley Fool