What happened
Appaloosa Management, run by billionaire David Tepper, bought SpaceX and CoreWeave shares during Q2. Wall Street's average price targets imply roughly 50% upside for SpaceX and 62% for CoreWeave.
Why it matters
The purchases add two AI-focused names to a portfolio where Amazon, Micron, TSMC, and Alphabet already make up about 50%. SpaceX's revenue grew 92% to $7.8 billion in Q2, while CoreWeave's revenue jumped 112.5% to $2.6 billion.
What to watch
SpaceX trades at a price-to-sales ratio of 69.1, leaving little margin for error if growth slows. CoreWeave's $104 billion backlog, up 245.5% year over year, is the key figure to track for its medium-term earnings.
WHO IT HITSInvestors in high-growth AI stocks may face a choice between paying rich valuations for SpaceX and CoreWeave or staying on the sidelines. The outcome hinges on whether SpaceX's Starship cadence and Starlink expansion meet expectations, and whether CoreWeave's contracted revenue converts into sustained profitability.
Summaries like this, every morning.
David Tepper's Appaloosa Management has concentrated its portfolio in a handful of tech and AI names, with Amazon, Micron, TSMC, and Alphabet making up roughly half. The addition of SpaceX and CoreWeave during Q2 doubles down on AI, but the two stocks differ sharply in valuation and risk. SpaceX trades at a price-to-sales ratio of 69.1, while CoreWeave's ratio is 5.8, reflecting different stages of growth and profitability.
SpaceX just went public in June with the largest IPO ever, and its stock has been volatile, swinging between $225.64 and $104.83. Revenue is growing fast, and its net loss narrowed to $541 million, but the company is still unprofitable. CoreWeave, which rents AI computing capacity, posted a wider operating loss and loss per share even as revenue soared, because it is investing heavily in its AI build-out. Its $104 billion backlog, plus over $25 billion contracted in Q3, signals demand is not fading.
For Appaloosa, the bet is that SpaceX's AI-related revenue and space ambitions will justify its premium valuation, and that CoreWeave's backlog will convert into profits. The biggest question marks are whether Starship can reach the needed launch cadence and whether CoreWeave's margins improve as it recoups its investments. If either stumbles, the stocks' current prices leave little room for error, especially for SpaceX.
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