David Tepper is one of the most successful hedge fund investors in the world. His Appaloosa Limited Partnership compounded at roughly 25% annualized after fees from its founding in 1993 through 2019, when he began returning cash to outside investors.
Today, roughly 90% of the capital in Appaloosa belongs to Tepper himself, and he continues to produce phenomenal returns. Through the first half of the year, the fund was up 32%.
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While Tepper has kept a significant amount of cash on hand, concentrated bets on a handful of stocks have helped drive those returns. Around 40% of his public equity portfolio is held in just three stocks, according to the fund’s most recent 13-F filing. Here’s whether they’re still worth buying today.
1. Amazon (17.7% of equities)
Tepper doubled his stake in Amazon (NASDAQ: AMZN) in the first quarter and added to it in the second quarter, making it the largest holding in his portfolio. His 5 million shares are worth about $1.25 billion as of this writing.
Amazon is both the world’s largest online retailer and cloud computing platform. Amazon has successfully built a wide moat around its e-commerce business by developing a massive logistics network. Over the last few years, management has focused on improving efficiencies to drive operating margin higher.
At the same time, it’s spending huge sums of cash to add compute capacity for its cloud computing business, Amazon Web Services (AWS). That’s pushed its free cash flow into negative territory over the last 12 months. CEO Andy Jassy argues that Amazon has a clear view toward strong returns on the invested capital, thanks to long-term contracts with its customers and relatively short payback periods on new servers and networking equipment.
This isn’t Amazon’s first major investment cycle that’s pushed free cash flow into negative territory. Amazon has executed this playbook in the past, and it’s ultimately grown to produce much more free cash flow over the long run. While the stock is trading above its March and April lows, shares still look attractive at 30 times forward earnings expectations.
2. Micron Technology (12.4%)
Micron Technology (NASDAQ: MU) is one of the three main memory chipmakers in the world. Tepper also has exposure to its Korean competitors through an ETF. Micron stock climbed more than 300% through the first half of 2026, prompting Tepper to cut his stake in the company by about 41% last quarter. Even so, it remains one of his top holdings.
