David Tepper Explains Why You Shouldn’t Buy the Dip in Nvidia Stock

David Tepper, the founder of Appaloosa Management, has expressed caution regarding investments in Nvidia stock, emphasizing uncertainty surrounding the long-term growth potential of artificial intelligence.

In a recent interview, Tepper indicated that although Nvidia’s stock appears appealing, he remains reluctant to increase his investments in the company. He noted, “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.”

The hedge fund manager reduced his holdings in Nvidia by more than 80% during the second quarter, leaving his stake at approximately $85 million by the end of June.

While acknowledging Nvidia’s significant role in the AI sector, Tepper voiced concerns about the sustainability of demand for AI technologies. He posed critical questions regarding the company’s capacity for future growth, asking, “Do you have enough power for the growth? Do you have the next generation models that can take their chip?”

Nvidia’s stock has surged nearly 200% over the past year and increased by more than 157% this year alone. The stock saw an additional rise of 2.9% in a recent trading session, bringing its market capitalization to over $3 trillion.

Despite this impressive performance, Tepper is uncertain about the company’s ability to sustain such growth, particularly beyond the year 2026. He explained that various factors must align for growth projections to materialize, stating, “I’m not saying it won’t happen. I’m just not smart enough to know if they will.”

Additionally, Tepper pointed out his reluctance to invest further in Nvidia due to the unpredictable nature of AI’s impact on earnings, remarking, “The variation of where that earnings can be is too much. So it’s not my preferred vehicle.”