David Tepper’s Appaloosa Management is refining its China strategy, moving away from broad market exposure toward specific company selections. The fund’s second-quarter Form 13F filing reveals a significant rebalancing: trimming stakes in e-commerce giants while increasing investment in search and AI-focused Baidu Inc.

Portfolio Rebalancing in China

Appaloosa reduced its position in Alibaba Group Holding Ltd (NYSE: BABA) by roughly 12%. More decisively, the fund exited its holdings in JD.com Inc (NASDAQ: JD) and PDD Holdings Inc (NASDAQ: PDD) entirely. These moves coincide with a complete exit from the KraneShares CSI China Internet ETF (NYSE: KWEB), eliminating a primary vehicle for diversified exposure to Chinese internet stocks.

The filing data reflects holdings as of June 30, 2026. It does not capture any portfolio adjustments made after the quarter ended.

Concentration Strategy

While shedding broad e-commerce and ETF exposure, Appaloosa increased its stake in Baidu Inc (NASDAQ: BIDU) by approximately 14%. This makes Baidu one of the few China-related positions to grow during the period. The filing does not disclose the rationale behind favoring Baidu, as 13F forms report only holdings, not investment theses.

The broader portfolio reshuffling saw Appaloosa reduce its total disclosed holdings from 31 to 27. Despite fewer positions, the fund’s reported value increased to about $7.7 billion from $5.9 billion. This rise in value alongside a reduction in position count indicates higher concentration within the remaining assets.

What the Numbers Show

The divergence between the exit from the KraneShares CSI China Internet ETF and the increase in Baidu suggests a deliberate shift from passive or sector-wide beta to active stock selection. By exiting JD.com and PDD while holding and adding to Baidu, Appaloosa appears to be differentiating based on individual business fundamentals rather than maintaining a blanket view on China’s equity market. The concentration of capital into fewer names, evidenced by the drop from 31 to 27 holdings, implies a higher conviction approach where quality selection outweighs diversification benefits.

Outlook

Tepper’s exposure to China has not disappeared but has become more focused. Future regulatory filings will indicate whether Appaloosa continues to consolidate around a handful of specific companies or rebuilds broader exposure if sentiment toward China’s equity market improves. For investors tracking these moves, the latest data points to stock selection driving positioning more than macro views on the region.

David Tepper’s Appaloosa Management shifted its portfolio toward megacap technology stocks and emerging AI infrastructure providers in the second quarter, significantly trimming exposure to memory chip manufacturers while expanding positions in the Magnificent Seven and initiating a new bet on CoreWeave Inc.

The hedge fund’s 13-F filing for the quarter ended June revealed a reduction of over 41% in its Micron Technology Inc. (NASDAQ: MU) stake. Despite the sale, the position’s value nearly doubled to approximately $1.125 billion as Micron shares surged 242% during the period. The fund also completely exited its SanDisk Corp. (NASDAQ: SNDK) position, which had exceeded $400 million prior to the exit, and fully exited Microsoft Corp. (NASDAQ: MSFT).

New AI Infrastructure Bets

Concurrently, Appaloosa increased its bets on major technology firms and added new positions in key AI infrastructure players. The fund boosted holdings in Amazon.com Inc. (NASDAQ: AMZN), Meta Platforms Inc. (NASDAQ: META), Alphabet Inc. (NASDAQ: GOOG, GOOGL), Nvidia Corp. (NASDAQ: NVDA), and Taiwan Semiconductor Manufacturing Company Ltd. (NYSE: TSM).

Notably, Tepper initiated a new position in cloud infrastructure provider CoreWeave Inc. (NASDAQ: CRWV) worth about $107.3 million. The fund also established a new stake in Broadcom Inc. (NASDAQ: AVGO) and created a new position of over $241 million in Apple Inc. (NASDAQ: AAPL). Amazon remained Appaloosa’s largest holding at nearly $1.2 billion.

What the Numbers Show

The divergence between share price performance and position sizing at Appaloosa highlights a strategic profit-taking move rather than a loss of conviction in the underlying asset class. While the fund reduced its share count in Micron by more than 40%, the total value of the holding rose from roughly $550 million to $1.125 billion. This indicates that the 242% surge in Micron’s stock price during Q2 more than compensated for the volume of shares sold, allowing Tepper to reduce risk exposure while simultaneously doubling the capital deployed in the name.

Furthermore, the portfolio became more concentrated despite growing in total value. The number of disclosed holdings fell from 31 to 27 even as the reported portfolio value increased to approximately $7.7 billion from $5.9 billion. This consolidation reflects a focused strategy on companies tied to AI computing infrastructure and legacy tech leaders, while eliminating positions in Advanced Micro Devices Inc. (NASDAQ: AMD), Corning Inc. (NYSE: GLW), Lyft Inc. (NASDAQ: LYFT), JD.com Inc. (NASDAQ: JD), PDD Holdings Inc. (NASDAQ: PDD), RTX Corp. (NYSE: RTX), UnitedHealth Group Inc. (NYSE: UNH), and Ball Corp. (NYSE: BALL). Outside technology, new positions were initiated in Boeing Co. (NYSE: BA), American Airlines Group Inc. (NASDAQ: AAL), and The Goodyear Tire & Rubber Company (NASDAQ: GT).

Memory Market Context

The shift away from memory stocks comes amid tight supply conditions driven by artificial intelligence demand. Counterpoint Research expects meaningful supply relief only by 2028, as AI demand strains conventional DRAM alongside high-bandwidth memory (HBM). Capacity expansions by Samsung Electronics Co. Ltd., SK Hynix Inc., and Micron have not yet alleviated the bottleneck.

Analysts maintain positive outlooks on the sector’s cash flow potential. Trivariate Research’s Adam Parker noted that markets may be underestimating Micron’s earnings durability, projecting free cash flow could approach $300 billion over two years. Similarly, Cantor Fitzgerald analyst CJ Muse expects SanDisk to generate approximately $150 billion in free cash flow over four years, supported by long-term pricing contracts and a target free cash flow margin of 50%.

Broader Tech Spending Concerns

The accumulation of big tech stocks by funds like Appaloosa contrasts with warnings from other market participants regarding off-balance sheet liabilities. A Wall Street Journal analysis found that Alphabet, Amazon, Meta, and Microsoft hold $248 billion in lease liabilities and $356 billion in long-term debt, with much of their future AI spending commitments remaining off-balance sheet. Investor Michael Burry has previously warned about these spending levels, suggesting similar scrutiny to that seen in past market cycles.

It is worth noting that 13F filings are a snapshot of holdings as of June 30, 2026, and do not reflect any portfolio changes Appaloosa may have made after the quarter ended.