Billionaire Bill Ackman doesn't buy many stocks. When he invests heavily in a new position, it's worth noting. Ackman did so recently, with his Pershing Square Capital Management hedge fund announcing that it has invested roughly 10% of its capital in Meta Platforms (META 2.52%).
Pershing Square exited its positions in Chipotle Mexican Grill (CMG 3.81%) and Hilton Worldwide Holdings (HLT 0.87%) to free up cash to fund the significant investment in Meta. This seemingly signals a shift in Ackman's mindset, from relatively stable consumer discretionary stocks to high-octane artificial intelligence (AI) growth stocks.
But why is the ultra-wealthy hedge fund manager especially loading up on Meta? And should you buy this powerhouse AI stock, too?
Image source: Getty Images.
An AI bargain?
Ackman tends to follow a value-investing approach in managing Pershing Square. At first glance, Meta might seem to be a surprising pick for him. After all, the stock trades at over 21 times forward earnings. That multiple doesn't scream "bargain."
However, Ackman has a different take. Pershing Square's 2026 annual investor presentation stated, "We believe Meta's current share price underappreciates the company's long-term upside potential from AI and represents a deeply discounted valuation for one of the world's greatest businesses."
The hedge fund noted in the investor presentation that Meta currently dominates the "secularly fast-growing digital advertising space." Meta's AI initiatives are enabling it to boost user engagement and help advertisers reach potential customers with personalized ads.
Ackman also recognizes that Meta could have significant growth opportunities with its popular AI smart glasses. Pershing Square noted in its investor presentation that the company has the "potential to unlock new use cases and engagement modes," citing wearables as a key area of opportunity.
The $135 billion elephant in the room
Some Wall Street analysts are nervous about the "$135 billion elephant in the room" with Meta. I'm referring to the company's 2026 capital expenditure guidance of up to $135 billion. Much of this capex will be directed toward increased investment in Meta's superintelligence development efforts.
Is Ackman concerned about the surge in capital spending? Nope. Pershing Square's investor presentation addressed the issue head-on, stating, "We believe concerns around Meta's AI-related spending initiatives are
underestimating the company's long-term upside potential from AI."
Ackman believes that Meta has the financial flexibility to increase its AI investments without causing problems. Its balance sheet remains exceptionally strong. The company's core advertising business is a cash cow. His hedge fund's investor presentation explained his thinking, stating that Meta is "well-positioned for long-term earnings growth after [its] planned spending ramp in 2026."
Meta has provided ample reason for Ackman's confidence. Despite increased AI-related capital expenditures this year, the company still expects solid year-over-year operating income growth in 2026.
NASDAQ: META
Key Data Points
Should you buy Meta Platforms stock, too?
Pershing Square's investment in Meta Platforms is already paying off. The stock jumped 11% in 2025 after the hedge fund initiated its position. While Meta's share price has been volatile so far this year, that's more reflective of the underlying market dynamics than issues with the company itself.
Ackman isn't the only Meta bull. Of the 67 Wall Street analysts surveyed by S&P Global (SPGI 2.15%) in February, 62 rated the stock as a "buy" or "strong buy." The average 12-month price target for Meta reflects a potential upside of around 34%.
Should you jump on the Meta bandwagon along with Ackman? If you believe an AI bubble is about to burst, probably not. However, if you think (as I do) that Meta is poised to deliver sizable long-term gains from its AI investments, following in the billionaire's footsteps could pay off handsomely.
