David Tepper explains why you shouldn't buy Nvidia stock when it dips By Investing.com

Investing.com – David Tepper, founder of Appaloosa Management, advised caution when buying Nvidia shares (NASDAQ:) because the long-term growth prospects of artificial intelligence are uncertain.

In an interview with CNBC's “Squawk Box” on Thursday, Tepper revealed that while Nvidia stock seemed attractive to him, he remained hesitant to make further investments in the chipmaker.

“We sold a lot of our Nvidia shares. We thought they were too high and would fall. Unfortunately, we didn't buy them when they fell again,” Tepper told CNBC.

According to CNBC, the hedge fund manager reduced his Nvidia holdings by more than 80% in the second quarter, so that his stake was still around $85 million at the end of June.

While Tepper acknowledged that there is still potential for Nvidia, one of the major players in the AI ​​boom, he expressed doubts about the sustainability of AI demand.

“Do you have enough power for growth? Do you have the next-generation models that can accommodate your chip?” he asked CNBC.

Nvidia has enjoyed a meteoric rise, gaining nearly 200% over the past 12 months and more than 157% this year. The stock rose another 2.9% in Thursday's session, with its market cap currently well over $3 trillion.

However, Tepper remains uncertain whether the company can maintain this course, especially beyond 2026.

He explained that “several things have to happen for the growth forecasts to materialize.”

“I'm not saying it won't happen. I'm just not smart enough to know if it will happen,” he told CNBC.

Tepper also stressed that he is hesitant to invest in Nvidia because the impact of AI on earnings is unpredictable. “The volatility in earnings is too great. So it's not my preferred vehicle,” he told CNBC.