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hello. Today, it's that Wall Street tycoon. I would like to take a look at the investment world of the savvy investor David Tapper . Especially in the field of artificial intelligence (AI), the hottest topic these days. While everyone was looking only at Nvidia, Taepo's biggest AI bet was in a somewhat unexpected place .
Uh, isn't this interesting ? Today, I will delve into this very part in detail. yes. In this session, Taepo's investment strategy. Among them, it is a giant Chinese internet company in particular. I’m going to try to analyze in detail why Alibaba made such a massive investment here and how this connects to AI trends .
I heard that the hedge fund Appaloza Management, which this person operates, has assets worth about $6.5 billion . Every single decision is bound to attract attention in the market. So why did a true top investor like Tapper place such a large weight on Alibaba specifically, rather than Nvidia, within the big picture of AI?
Uh, I would like us to take some time to examine together what kind of calculations were behind that, and what the recent movements signify. Okay, first, let's see how serious Tapper is about AI. I bought a huge amount of ND stock in the second quarter of 2025. Because they say they increased their stake by a whopping 483%.
It was a really impressive scale, but that was n't all. As I looked through the portfolio, I noticed that there was a separate AI-related stock with the largest weighting . This is where it gets really interesting. Of course, the NBI you just mentioned is also in it . And of course, Alibaba, which we will be focusing on today, is also included.
But the interesting thing is that three of the top 10 are companies called so-called AI hyperscalers . You know, hyperscalers are those massive corporations that provide the vast cloud resources necessary for AI development or operation . It's Amazon AWS. And Google Cloud's parent company, Alphabet, and Microsoft's Azure.
These three companies occupy 3rd, 8th, and 10th place, respectively . What should I call it in the age of AI ? They can be called core infrastructure companies . That's not all. Dental companies are using AI extensively across their entire services, such as meta-platforms, Facebook, and Instagram, and these days they are also leading the AI glasses market.
Uber Technologies, ranked 9th, also calls itself an AI-first company and is applying AI to almost every aspect of its business, from taking calls and optimizing deliveries to developing autonomous driving . This might even seem a bit surprising, but power companies Vistra and Enerige Energy are also ranked 5th and 6th, respectively.
What this means is that it shows the growing importance of data centers, which consume enormous amounts of electricity to run AI models . Perhaps the AI revolution is impossible without them. Well, you could even look at it this way . and. From what I've heard, Amazon, Google, Microsoft, Meta, and Vividia—just hearing their names makes you think they are formidable leading American tech companies.
But surprisingly, the company at the very top of the Taepa portfolio, surpassing all these other companies, was China's Alibaba . This is a truly notable choice in the US-centric AI investment landscape . To give you an idea of the scale... As of June 30, 2025, Tapper's total portfolio was about $6.5 billion, and of that, he held Alibaba stock worth a whopping 12.4%, or $801.5 million .
It is a truly overwhelming proportion for a single stock. Why on earth was it an alibi? yes . I think we can find a clue in what Tapper said in a CNBC interview in September 2024 . At that time, China's Zhengdu announced a large-scale economic stimulus package. Then Tapper said he would buy everything in China.
" Buying everything" Ch or said it very aggressively . It was a signal that they are viewing the entire Chinese market very strongly. However, it was n't simply the expectation of that support system. In that interview, he also said that at the time, many Chinese stocks were evaluated as having quite attractive valuations—that is, stock prices relative to corporate value—and at the same time, solid growth prospects.
Alibaba was viewed as a prime example of simultaneously satisfying those two conditions: being cheap and having great growth potential . okay. If there are expectations for economic stimulus, stock prices are low, and growth potential has been shown. Well, from an investor's perspective, it must have been naturally attractive.
But wouldn't the situation have been similar for other Chinese big tech companies at that time ? Was there any particular reason why Alibaba especially caught Tapper's eye ? More than just buying the whole of China. Uh, that's a good point. Of course, at that time, other Chinese tech stocks also had an undervalued appeal .
But Alibaba holds an almost overwhelming market share in China in the fields of e-commerce and cloud computing, you know . I think that was important. So, beyond simply being cheap, it is a key asset that will benefit the most when the Chinese economy recovers . It is highly likely that they made this judgment .
In other words, under the strategy of "buying China," they specifically singled out Alibaba as the most representative stock with the greatest growth potential. It can be viewed this way. But as you said, situations are always changing. that's right. That is especially true for the stock market . Alibaba's stock price more than doubled as 2025 began, didn't it?
And at the same time, there was a change in the aspect of the valuation that Tapper was initially attracted to. The forward price-to-earnings ratio, or forward PE, which was less than 10 at the beginning of the year, has now risen to 23.3. This " forward" refers to how many times the current stock price is compared to a company's expected future earnings, and 23.3 times is a significantly high level, even when compared to Alibaba's past average or the current market average .
It has become a bit difficult to say that it is simply cheap like it used to be . So now, the key question is whether growth potential can support the increased price . That is correct. If you look solely at the recently released figures, the apparent growth trend might appear to have slowed down somewhat.
Sales for the fiscal year ended June 30, 2025, grew by only 2% compared to the same period last year . Of course, the ranking profit for the same period did increase by as much as 70%, but we need to look at this in more detail. It is mainly because the value of stocks held in other companies increased or significant profits were generated from selling some business units, so it is difficult to say that Alibaba's core business itself grew explosively .
However, when looking at Alibaba's future growth potential, a perspective somewhat different from past performance is required. This is precisely the achievement demonstrated in the field of AI . This is really dazzling. Alibaba's sales of AI-related products and services have recorded triple-digit growth rates for eight consecutive quarters .
This is a really amazing speed. And the revenue of the Cloud Intelligence Group, a core growth driver, also showed a very solid performance, increasing by 26% year-over-year in the most recent quarter. However, the point we need to note here is that this AI revenue growth was n't simply achieved by selling cloud infrastructure.
This is proof that AI technology is being deeply applied to Alibaba's core business areas, such as its vast e-commerce data, logistics networks, and fintech platforms, leading to substantial efficiency improvements and the creation of new value . For example, things like using AI to improve product recommendation accuracy, automating logistics warehouse operations, or making financial fraud detection systems smarter.
I suspect that perhaps what Tapper was interested in was Alibaba's ability to go beyond hardware companies like Nvidia or simple infrastructure providers and directly connect AI to solving real business problems and generating revenue . Furthermore, this Alibaba Cloud Platform... It is evaluated as playing a very essential role in achieving the Chinese government's ambitious goal of becoming a global leader in the AI field by 2030.
This means that it holds national strategic importance beyond mere corporate growth . Wow, triple-digit growth in AI-related revenue for eight consecutive quarters is really amazing. And the fact that Alibaba Cloud is deeply connected to China's national AI strategy also seems like a very important point.
However, Tapper, who seemed to view the potential of Alibaba's AI and Zhang Cloud very highly, has recently shown some unexpected moves. This means that they reduced their stake by about 23% by selling more than 2 million shares of Alibaba stock in the second quarter . Why did they suddenly reduce the weight?
How should I view this, too? Well, the most likely interpretation is that they tried to realize some profits because the stock price had risen too much in a short period . Since stock prices have more than doubled since the beginning of 2025, adjusting portfolio weighting for risk management is one of the strategies commonly used by successful investors.
They might have been wary of the weight of a specific stock becoming too large in the overall portfolio . But there is one really interesting fact here. The point is that if Taepo had simply continued to hold the stocks it sold in the second quarter, it would actually have made a much larger profit by now.
This is because the gains in Alibaba's stock price from the end of the second quarter—that is, since June 30—until now have been greater than the total increase for the first half of 2025. Well, it is hindsight, but you could say the timing of the sale was a bit early . Wow, it is really hard for even the best investors to perfectly time the market .
Personally, it might have been a bit disappointing that the stock price rose even steeper after you sold it . That's really true . I think this is an example showing that it is nearly impossible for even the most brilliant investor to accurately predict the future. Of course, there are certainly risk factors to be cautious about when considering an investment in Alibaba at this point .
As I mentioned earlier, the stock price isn't as cheap as it was a few months ago . The valuation burden has increased. And also the unpredictable regulatory risks of the Chinese government . This is a variable that could turn red at any time. It's like a label that always follows investment in Chinese companies .
okay. So you are saying that there are definitely risk factors as well . So, putting all this together, can we definitively say that Alibaba, which once held the largest weight in the Tapper portfolio, is the best AI stock at this point in time ? Or should we change our perspective now, just as Tapper reduced his stake ?
It might be a little difficult to do . Because of the increased valuation burden or potential regulatory risks you mentioned . However, if you look at it from a longer-term perspective, the story could be a bit different. Considering the rapid adoption of AI and the explosive growth of the cloud market in the massive Chinese market, it is highly likely that Alibaba will continue to play a key role at the center of it all.
In particular, the ability to integrate AI technology seamlessly into actual business to generate results is worth continuing to pay attention to. Taepo’s recent reduction in its stake is likely a decision to manage portfolio risk and lock in some profits by comprehensively considering these changing market conditions, such as the increased valuation burden due to rising stock prices and the remaining regulatory risks .
I think it is reasonable to interpret it this way. This could be considered a very good example of how the best investors adjust their positions while responding nimbly to market changes. I hope you will keep in mind that when making investment decisions, it is important to adopt a flexible approach by comprehensively considering macroeconomic environmental changes, individual company fundamentals, and risk factors.
yes . Today, we took a look at the extensive AI investment strategy of a big-name investor named David Tappo through his portfolio . In particular, when everyone focuses only on US tech stocks, you have probably heard a bit deeply about Alibaba, which was once his largest investment and still accounts for a significant portion of his portfolio .
From the background of the initial investment— that is, the analysis of its attractive valuation, growth expectations, and above all, its unrivaled potential in the AI and cloud sectors—to the partial equity adjustment that occurred after the recent sharp rise in the stock price . It was a very interesting case study on how building investors seize opportunities and manage risks in a constantly changing market environment.
Lastly, I would like to wrap up by asking you a question worth thinking about . I mentioned earlier that Alibaba Cloud's business plays a key role in achieving China's national AI goals . The fact that the business of a specific private company is so deeply connected to the nation's strategic goals.
What does this mean, especially for overseas investors like us ? Is it more likely that this will become a hidden risk factor, such as unpredictable government intervention or geopolitical tensions ? Or could it rather be a special opportunity signifying strong government support and a stable foundation for growth ?
Deeply contemplating the nature of this complex relationship would be an exploration just as interesting as the conversation we shared today.
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