Bill Ackman bets $2 billion on Meta's AI investment despite Wall Street's growing concerns

Why Bill Ackman Is Making a $2B Bet on Mark Zuckerberg's A.I. Vision

Despite fears over ballooning A.I. costs, Bill Ackman is backing Meta and Mark Zuckerberg to deliver future growth and profits. Meta's reputation as one of Silicon Valley's biggest A.I. spenders, but with little to show for it so far, is spooking much of Wall Street. But hedge fund billionaire Bill Ackman isn't fazed. Ackman's New York-based fund, Pershing Square, disclosed this week that it has taken a nearly $2 billion stake in Meta, equivalent to about 10 percent of the fund's capital. The bet reflects Ackman's contrarian conviction that Meta CEO Mark Zuckerberg will ultimately deliver on his A.I. ambitions. Sign Up For Our Daily Newsletter Sign Up Thank you for signing up! By clicking submit, you agree to our <a href="http://observermedia.com/terms">terms of service</a> and acknowledge we may use your information to send you emails, product samples, and promotions on this website and other properties. You can opt out anytime. See all of our newsletters "We believe Meta's current share price underappreciates the company's long-term upside potential from A.I. and represents a deeply discounted valuation for one of the world's greatest businesses," said Pershing Square in an investor presentation on Feb. 11. A self-proclaimed disciple of Warren Buffett, Ackman is not typically known as a tech investor. His most successful wagers have historically been in more traditional businesses such as Chipotle and Hilton. That began to change in 2023, when he took a $600 million position in Google, betting on the company's long-term A.I. potential. Ackman has since said that advanced forms of A.I. represent a "meaningful investment" theme for his portfolio. In recent quarters, Ackman has exited his holdings in Chipotle and Hilton and added new positions in Uber and Amazon, reflecting a broader shift to tech. Ackman's wager on Meta is rooted in the view that investor anxiety over A.I. spending is overshadowing an otherwise improving business trajectory. Meta's shares have fallen about 10 percent over the past 12 months, weighed down by concerns that its capital expenditures are spiraling out of control. The company spent $72.2 billion on A.I.-related capital expenditures last year, as it pushed ahead with massive infrastructure projects such as new data centers and poured billions into building its Meta Superintelligence Labs team. That figure is expected to rise further, with Meta projecting total spending of between $115 billion and $135 billion this year. So far, those investments have yet to translate into outsized financial returns. Still, Meta has argued that its A.I. strategy remains in an early stage. "We're in this interesting period where we've been rebuilding our A.I. effort," Zuckerberg told analysts last month. "The picture will become clearer, and I think more exciting, if we do our jobs well over the course of the year." Ackman believes the eventual payoff will justify the scale of the investment. He has described Meta's advertising-driven business model as "one of the clearest beneficiaries of A.I. integration." In its presentation, Pershing Square said A.I. could significantly boost user engagement, enable more relevant and personalized advertising, and open up new growth avenues such as enterprise-focused A.I. assistants and wearable devices. Those prospects, the firm argued, support Meta's decision to "front-load infrastructure and talent investments." Ackman also pointed to Meta's ability to rein in costs when necessary, citing the company's "Year of Efficiency" in 2023, when it cut headcount and scaled back expenses after years of aggressive expansion. Meta is now one of just 14 positions in Ackman's concentrated portfolio. Ackman made his name through aggressive proxy battles and high-profile short bets, but he has since said he has "permanently retired" from that approach in favor of long-term, constructive investments. Pershing typically adds only one to three new positions each year. The strategy has paid off recently. Pershing Square, which managed more than $19 billion in assets as of December, ended 2025 with a 20.9 percent gain in net asset value, outperforming the S&P 500's roughly 18 percent return.

Billionaire Bill Ackman Just Sold All His Chipotle Stock To Buy This AI Stock Up 1,660% Since Its IPO

Big-name value investors are few and far between today, but Bill Ackman, founder of hedge fund Pershing Square Holdings (PSHZF 2.01%), remains near the top of the list. As such, those who practice the art and science of value investing would do well to pay attention to his big portfolio moves. After all, Ackman tends to take large, concentrated positions, indicating a high level of conviction. At its recent investor presentation, Ackman revealed Pershing had exited its longtime position in Chipotle Mexican Grill (CMG 3.80%), using those proceeds to allocate roughly 10% of its portfolio to this brand-name AI stock. Pershing buys Meta Platforms, expanding deeper into the tech sector On Wednesday, during Pershing's annual investor presentation, Ackman revealed a roughly $2 billion stake in Meta Platforms (META 2.83%), taken last quarter, amounting to nearly 10% of Pershing's Fund. It's no surprise that Ackman invested in the social media giant. After all, Ackman also invested in Meta's digital ad peer Alphabet (GOOG 0.63%) (GOOGL 0.62%) three years ago, which has more than tripled since then. Pershing accumulated its stake in Meta following Meta's third-quarter earnings report in late October, which was followed by a big sell-off in the stock. On that earnings release, Meta also gave a preliminary spending outlook for 2026 that hinted at much higher AI investments, saying its capital expenditures would be "notably larger" this year and grow at a "significantly faster percentage rate" than 2025. While Meta also reported accelerating revenue growth at the time, its spending plans spooked investors, triggering a severe sell-off. Meta stock fell from roughly $750 per share before earnings to below $600 in the immediate aftermath. The stock has since recovered to the high $600s after a strong fourth quarter report, and Pershing revealed that its cost basis in the stock is around $625 per share. The "best business to own" according to Buffett This earnings season, investors have continued to be skittish about the massive amount of AI-related infrastructure spending announced by other Magnificent Seven stocks besides Meta. It's a fair concern; after all, those huge spending plans will likely eat up all the free cash flow of these companies, forcing even the most financially stable of the large tech giants to take on debt. And while the payoff may look uncertain right now, it's also possible all that spending will create tremendous value. After all, Warren Buffett once said, "The best business to own is one that over an extended period can employ large amounts of incremental capital at very high rates of return." Why Meta is in a great position One of the main attributes Ackman likes about Meta is that even if the company's huge investments don't result in artificial general intelligence or any dramatically successful new business lines, Meta's core social media properties will still benefit. In the Pershing presentation, Ackman made the point that the, "overbuilding risk [is] mitigated by the core business's ability to grow into and absorb excess capacity." This is because Meta has demonstrated the ability to use AI to increase engagement and grow usage on its core Facebook and Instagram platforms. Beyond engagement, AI can also help advertisers create ads and target users with high precision. Greater ad effectiveness enables Meta to charge ever-increasing prices per ad, further accelerating revenue growth. The benefits of Meta's AI investment have been evident over the past year, as Meta's revenue accelerated from 16% growth in Q1 to 26% in Q3. While the fourth quarter's growth slightly decelerated to 24%, that quarter also lapped last year's presidential election, when political ad spending was elevated relative to 2025. Given the success of its past AI spending, it stands to reason that Meta could see even greater revenue and profit acceleration with its higher levels of investment. Meta is cheap, and even cheaper without Reality Labs Although Meta has a unique advantage over most other businesses, the stock is still not expensive. In fact Meta trades at only 21.8 times 2026 earnings estimates, about in line with the S&P 500 Index. However, if one strips out Meta's billions of spending on the Metaverse, which Ackman rightly points out could be pulled back or canceled at management's discretion without affecting near-term results, then the multiple on the "core" business is only 18 times earnings. It is somewhat incredible that Meta's social media platforms, which have over 3.5 billion daily active users and significant network effects, are trading at a discount to the overall market. And yet, that does appear to be the case. A core holding of most portfolios Meta is really the only large tech company outside of the cloud computing infrastructure companies with the financial means to invest in AI infrastructure. While investors are growing uneasy about all that spending, each of these companies could also dial back those investments if AI algorithms hit a scaling limit. However, if these massive investments create a wide moat, then the upside could be tremendous. In short, Ackman's Meta investment isn't particularly novel, but it does looks smart.