If you've met one billionaire, you've met... one billionaire. They're usually quite different, even when they've made their fortunes in similar ways.
When there's a stock two billionaires agree on, it's noteworthy. And when you find a stock that three billionaires like, you'll really want to check it out. There's one -- and only one -- artificial intelligence (AI) stock billionaires Bill Ackman, Chase Coleman, and David Tepper all own.
These billionaires' common AI denominator
Ackman, Coleman, and Tepper climbed into the ranks of the world's wealthiest individuals by managing hedge funds. Ackman founded Pershing Square Capital Management in 2004 and is now worth $4.1 billion. Coleman started Tiger Global Management in 2001. Over two decades later, his net worth is $5.7 billion. Tepper launched Appaloosa Management in 1993 and is the richest of the three with a net worth of $20.6 billion.
Their investing styles aren't alike. Ackman's Pershing Square owns only seven stocks, six of which aren't tech stocks. Coleman and Tepper have more in common, though, with larger portfolios featuring quite a few tech stocks.
What's the lone common AI denominator for these three billionaire investors? It's Google parent Alphabet (GOOG 0.56%) (GOOGL 0.42%).
NASDAQ: GOOGL
Key Data Points
At the end of 2023, Alphabet, including class A and C shares, was the top holding for Pershing Square. The tech giant was the seventh-largest position in Coleman's Tiger Global portfolio and Tepper's Appaloosa portfolio.
Why do these wealthy investors like Alphabet?
Ackman has been the most vocal of the three billionaires about why he likes Alphabet. He told CNBC last year that the company "will be a dominant player in AI for the very, very long term." Ackman noted that Google's competitive advantages include designing its own AI chips and its access to tremendous cloud processing power.
Coleman's Tiger Global Management owned Alphabet stock several years ago but exited its position. His enthusiasm returned last year with the generative AI boom. In April 2023, Coleman recommended buying mega-cap tech stocks. That turned out to be great advice. He also suggested that investors "be patient" because the AI transition would "be gradual." That's good advice too.
Tepper hasn't spoken as much about his investments in public. A cursory glance at his Appaloosa holdings, though, reveals that he's bullish about AI. Eight of Appaloosa's top 10 positions are AI stocks.
Is Alphabet stock a buy now?
None of these billionaires bought shares of Alphabet in 2023 Q4. Coleman sold nearly 24% of Tiger Global's stake in the Google parent, while Tepper sold over 16% of Apaloosa's shares. But is Alphabet stock a buy now?
Alphabet's shares have pulled back a little in recent days. I wouldn't be surprised if the stock declined more in the near term with geopolitical concerns and stubborn inflation levels weighing on the stock market.
Some investors believe that Al presents an existential threat to Alphabet. They think Google Search could be rendered obsolete as AI virtual assistants improve. But Alphabet has climbed a "wall of worry" about its business and AI strategy, with its stock soaring nearly 75% since early 2023.
I expect AI will provide a strong tailwind for Google Cloud over the next decade and beyond. My hunch is Alphabet will successfully navigate the major technology changes by evolving its search engine. I especially like the prospects for its Waymo self-driving car unit as the robotaxi market takes off. I'm optimistic about the company's future and view the stock as a great long-term pick.
