Billionaire Bill Ackman is a prominent hedge fund manager well known for holding a relatively small number of high-conviction stocks. His firm, Pershing Square Capital Management, currently has $12 billion invested in 11 companies.
Ackman made a few interesting capital allocation decisions in the first quarter. He sold shares of megacap Alphabet (GOOGL 0.78%) (GOOG 0.66%) and bought Uber Technologies (UBER 0.10%), a stock that has returned 266% since January 2023. The trades are detailed below:
- He sold 772,000 shares of Alphabet, trimming his position 7%. That is surprising because most analysts viewed the stock as undervalued throughout the first quarter, and the same is true today. The median target price of $200 per share implies 9% upside from Alphabet's current share price of $183.
- He bought 30.3 million shares of Uber, now his largest holding at 19% of the portfolio. Ackman explained his confidence on social media, praising the leadership of CEO Dara Khosrowshahi and calling Uber "one of the best-managed and highest-quality businesses in the world."
Here's what investors should know about Alphabet and Uber.
Image source: Getty Images.
Alphabet: The stock Bill Ackman sold in the first quarter
Alphabet is the largest adtech company in the world. Popular web properties like Google Search and YouTube helped the company capture more than a third of global digital ad spending last year, roughly equivalent to its market share in the previous year. However, the company is projected to lose share as competitive pressure intensifies in the future.
To elaborate, Amazon has become a formidable player in the digital advertising industry due to its ability to engage shoppers, and the company is likely to take share in the future as businesses spend more on retail advertising. But generative artificial intelligence (AI) platforms like OpenAI and Perplexity also threaten to siphon ad dollars away from Alphabet.
Alphabet's Google is the third-largest public cloud in terms of infrastructure and platform services (CIPS) revenue. It captured 12% of CIPS spending in the first quarter of 2025, up from 11% last year, according to Synergy Research. As a recognized leader in AI infrastructure, large language models, and data science platforms, the company may continue to gain share in future quarters.
Beyond its core businesses, Alphabet's Waymo is an early leader in autonomous driving technology. It already provides commercial autonomous ride-sharing services in five U.S. cities and plans to launch in at least two more next year. Waymo is also testing its robotaxi fleet in several other U.S. cities. Management said in April the company currently delivers more than 250,000 paid rides per week.
Looking ahead, eMarketer estimates digital ad spending will grow at 10% annually through 2028, and Grand View Research expects the cloud computing market to increase at 20% annually through 2030. Collectively, Alphabet has a good shot at low-double-digit annual sales growth through the end of the decade, with room for upside if its robotaxi business continues to gain momentum.
Wall Street estimates Alphabet's earnings will increase at 14% annually over the next three to five years. That makes the current valuation of 20.5 times earnings look reasonable. But investors should be aware that Alphabet is currently caught into two legal battles, and the associated risks may explain why Ackman trimmed his position in the first quarter.
To elaborate, courts have already determined Alphabet has an illegal monopoly in internet search and adtech software, and the cases have moved into the remedies phase. While a breakup seems unlikely, the Justice Department wants Alphabet to divest certain parts of its business. A federal judge will decide on the remedy for its internet search monopoly in August, and the remedies hearing regarding its adtech software will begin in September.
Uber: The stock Bill Ackman bought in the first quarter
Uber has a strong presence in the mobility and food delivery markets. Specifically, it is the largest ride-sharing platform and the second-largest food delivery platform in the U.S., as measured by sales. More broadly, Uber operates the largest ride-sharing platform in the 10 largest markets worldwide, and the largest food delivery service in eight of the top 10 markets.
That makes Uber a logical partner for autonomous vehicle (AV) companies. CEO Dara Khosrowshahi sees robotaxis as at $1 trillion opportunity in the U.S. alone, and he recently told analysts, "Uber can deliver the lowest operational costs for our AV partners because we are leaps and bounds ahead on every aspect of the go-to-market capabilities."
Indeed, Uber has already partnered with several companies that have either launched or plan to launch robotaxi services in the near future. The most conspicuous exception is Tesla, but several consequential partnerships are detailed below:
- Alphabet's Waymo offers robotaxi rides through Uber in Phoenix, Austin, and Atlanta. Also, autonomous food delivery is available through Uber Eats in Phoenix.
- May Mobility will offer robotaxi rides through Uber in Arlington, Texas, by the end of 2025. The companies will take their partnership to additional U.S. markets in 2026.
- Pony AI will offer robotaxi rides through Uber in a "key market in the Middle East" this year, with a goal of scaling to additional international markets in the future.
- Volkswagen will offer robotaxi rides through Uber in Los Angeles. Testing is scheduled to start later this year, and the commercial launch will follow in 2026.
- WeRide offers robotaxi rides through Uber in Abu Dhabi, with Dubai to follow later this year. The companies will expand the partnership to 15 additional cities in the next five years.
Wall Street estimates Uber's earnings will increase at 25% annually over the next three to five years. That makes the current valuation of 15.9 times earnings look relatively cheap. I think investors should follow Ackman's lead and take a stake in Uber stock, though I would start with a small position.
