Billionaire Bill Ackman is something of a legend in investing circles. The activist investor heads up Pershing Square Capital Management -- the hedge fund he founded -- with roughly $20 billion in assets under management.
His strategy, which involves acquiring sizable positions in just a few stocks and holding them for years, has been remarkably successful. Pershing Square returned 34% in 2025, nearly double the performance of the S&P 500. That's not a one-off. Over the past eight years, Pershing has returned 23% annually, far outpacing the S&P's 14% gains.
When Ackman adds a stock to Pershing's portfolio, it tends to attract a lot of attention. This week was no different when he revealed a sizable stake in artificial intelligence (AI) and social media giant Meta Platforms (META 2.52%).
Image source: Getty Images.
A big bet
Ackman revealed the position in an investor presentation on Pershing's website. The stake in Meta is worth about $2 billion, or roughly 10% of the hedge fund's $20 billion portfolio.
The hedge fund manager lays out a compelling case for owning Meta stock. Ackman points out that the social media giant is a "dominant leader in the secularly fast-growing digital advertising space," with an "entrenched global user base of more than 3.5 billion daily active users." He goes on to four central pillars of his investing thesis:
- A high-quality advertising business model with increasing returns to scale
- Meta's business model is one of the clearest beneficiaries of AI integration
- It's well-positioned for long-term earnings growth after its planned spending ramp in 2026
- It has a strong balance sheet and a high-margin core business, providing significant financial flexibility.
Meta stock has been one of the undisputed winners of the AI era, returning 450% since early 2023. However, the stock has been stuck in neutral over the past year as concerns about heavy spending to capitalize on AI have weighed on the stock. In the fourth quarter, CFO Susan Li said the company planned capital expenditures of between $115 billion and $135 billion in 2026, an increase of 73% year over year at the midpoint of its guidance.
NASDAQ: META
Key Data Points
Ackman believes these fears are overblown. "We believe concerns around Meta's AI-related spending initiatives are underestimating the company's long-term upside potential from AI," he wrote.
Tidbits from Meta's latest results support that contention. The company uses AI to surface more relevant content and target its advertising more effectively. Those efforts are bearing fruit. The average price per ad increased by 6% year over year in the fourth quarter, while ad impressions increased by 18%, driven by higher engagement across all its platforms.
At less than 28 times earnings, Meta is selling at a discount to some of its big tech peers, an opportunity that Ackman couldn't pass up.
