Does Billionaire David Tepper See Risks in Alphabet and Meta That Wall Street Ignores

Does Billionaire David Tepper Know Something About Alphabet and Meta That Wall Street Doesn’t?

Billionaires don’t build fortunes of $20 billion or more by following the herd. They often see risks or opportunities well before Wall Street analysts. That reputation is why investors are scrutinizing David Tepper, founder of Appaloosa Management, after his latest moves involving two of the most prominent artificial intelligence (AI) stocks: Alphabet and Meta Platforms.

Tepper, worth $23.7 billion, isn’t known for timid trades. He made his name in the 1980s trading junk bonds at Goldman Sachs before launching Appaloosa in 1993, which has since become one of the most respected hedge funds in the world. His decisions carry weight not just because of his track record, but because they often cut against consensus.

Now, as Wall Street analysts remain bullish on Big Tech, Tepper has reduced his holdings in both Alphabet and Meta. The question is whether he sees storm clouds that others don’t—or is simply taking profits after a long run-up.

Tepper’s History With Alphabet

Tepper first bought Alphabet’s class C shares in 2015. Since then, Alphabet has transformed from an online advertising leader to an AI powerhouse, with Google Cloud and its DeepMind unit pushing the boundaries of machine learning. Appaloosa has held Alphabet stock through multiple cycles, benefitting from its climb to one of the world’s most valuable companies.

Yet Appaloosa’s latest 13F filing for Q2 2025 revealed a notable reduction: Tepper sold 510,000 shares, cutting his stake in Alphabet by roughly 25%.

Why now? Alphabet continues to dominate digital advertising, but its growth is slowing. Competition in AI is intensifying, costs for data centers are rising, and regulators in the U.S. and Europe are sharpening their focus on antitrust and data privacy. Tepper may see Alphabet’s risk-reward balance tilting.

Tepper’s History With Meta

Tepper’s relationship with Meta (then Facebook) dates back to 2014, when he first bought shares—only to sell them the same year. In 2016, he returned, this time holding long-term as the company weathered scandals, leadership challenges, and a costly pivot to the metaverse.

In Q2 2025, however, Tepper trimmed again: selling 150,000 shares, a 27% cut in his Meta stake.

Meta is enjoying a resurgence thanks to cost discipline, improved ad targeting, and early AI monetization in products like Instagram and WhatsApp. Wall Street consensus remains bullish. But for Tepper, the rally may look fragile. Heavy spending on AI infrastructure, regulatory scrutiny over misinformation, and ongoing uncertainty in its metaverse strategy may be signals to de-risk.

Why Tepper’s Moves Diverge From Wall Street

Wall Street analysts generally remain optimistic about Big Tech. Alphabet and Meta are still seen as core AI plays with resilient business models. Tepper’s trims, then, stand out as contrarian.

Possible explanations include:

• Profit-Taking: Both stocks have delivered substantial gains. Tepper may simply be locking in returns.
• Risk Management: With AI competition intensifying, costs ballooning, and regulators circling, Tepper could be managing downside exposure.
• Capital Rotation: Hedge funds often reallocate capital to emerging opportunities. Tepper may see better risk-adjusted returns outside Big Tech’s current darlings.

Risks and Challenges Facing Alphabet and Meta

• Regulatory Headwinds: Antitrust lawsuits, privacy rules, and political scrutiny are growing threats. Both companies face pressure in the U.S. and EU.
• AI Costs: Building AI infrastructure requires billions in data centers and chips, squeezing margins even as revenue potential remains long term.
• Competition: Rivals like Microsoft (with OpenAI) and Amazon Web Services are intensifying the AI arms race.
• Business Cyclicality: Advertising, the lifeblood of both firms, is vulnerable to economic downturns.

For a hedge fund manager like Tepper, these risks may look outsized compared to potential near-term upside.

Outlook: Contrarian or Ahead of the Curve?

Whether Tepper’s move proves prescient depends on how Alphabet and Meta navigate the next phase of AI disruption. If advertising remains resilient and AI monetization ramps, his trims could look premature. But if costs spiral or regulators bite, Tepper will again be credited with spotting trouble early.

Executive Takeaway

David Tepper’s portfolio shifts should not be ignored. For CEOs, CFOs, and investors, the message is not necessarily to sell Alphabet or Meta, but to re-examine concentration risk in AI-driven Big Tech.

• Don’t follow consensus blindly. Even market darlings face cost, regulatory, and competitive pressures.
• Risk management is strategy. Reducing exposure is not bearishness; it’s discipline.
• Capital rotation matters. Like Tepper, executives must constantly weigh whether capital is best deployed in today’s winners—or tomorrow’s.

Wall Street may still be all-in on Alphabet and Meta, but Tepper’s cautious trimming is a reminder: sometimes the smartest play isn’t doubling down, but stepping back.

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