American Airlines Group Inc. (NASDAQ:AAL) is a new stock in David Tepper’s portfolio. Tepper opened a position in AAL in Q3 2025, buying nearly 1.4 million shares worth $104 million. The average price target for AAL suggests a 4% upside, while the Street high indicates a 30% upside.

Wells Fargo initiated coverage of AAL with an Equal Weight rating and a $17 price target on December 18. The firm cited positive drivers for the stock, including a new co-branded card deal and upgraded cabins. However, higher debt and demands for premium service enhancements were noted as potential challenges.

Wells Fargo predicts AAL will significantly strengthen under its exclusive Citi co-brand agreement by 2026, with cash remuneration expected to increase annually by 10% to reach $10 billion by 2030. Pre-tax income is projected to increase by $1.5 billion, or $1.70 per share, compared to the previous twelve months ending Q3 2024.

American Airlines is focusing on premium upgrades to attract luxury travelers and regain passengers from competitors. The introduction of new aircraft like the Boeing 787-9 and Airbus A321XLR aims to enhance the international travel experience. However, tensions with labor unions, delays in Boeing deliveries, and low employee morale are noted concerns.

While AAL shows investment potential, certain AI stocks offer higher upside potential with less downside risk. Investors seeking undervalued AI stocks can explore opportunities beyond AAL. Consider exploring our free report on the best short-term AI stock for potential growth opportunities in the market.

Read more at Yahoo Finance: Wells Fargo Sees Positive Drivers for American Airlines (AAL) Offset by Higher Debt