Artificial intelligence (AI) investing can take many shapes. While some are buying the fastest-growing stocks they can get their hands on, others are looking at more backdoor plays like utilities and infrastructure. Another way is to invest in companies providing the computing infrastructure.
There are many ways to do it, and I think looking to some legendary investors for some guidance is a smart move.
One way to do this is to follow billionaire hedge fund managers. Because these entities are required to report end-of-quarter holdings to the SEC 45 days after the quarter ends, investors can get a delayed view into what their portfolios look like. Bill Ackman and Pershing Square Capital are ones that I like to follow, and Ackman's taking an interesting approach to AI investing: Buying some of the beaten-down names that have huge potential to rise again.
In some aspects, this seems like AI value investing -- words that aren't normally together in a sentence. But if you're patient and do this correctly, it can result in huge gains.
Image source: Getty Images.
Pershing Square's portfolio is concentrated
Bill Ackman and Pershing Square run a concentrated portfolio. As of the fourth quarter, they only owned 10 different companies. That's a lot of confidence in your picks, but when it's right, it pays off big time.
Ackman has a different ways he's exposed to the AI buildout. His largest holding is Brookfield (BN +0.52%). Brookfield owns several businesses, and heavily invests in others, that are directly involved with AI, such as power transmission, energy generation, and data centers. Ackman is clearly a bull on the stock, as 18% of his portfolio is made up of Brookfield's stock.
Amazon (AMZN +0.11%) is another large part of Ackman's portfolio. It makes up 14%, and he has added to this position twice. The first purchase was during the depths of the tariff sell-off in April 2025. He increased his stake by 65% in Q4 as well.
Amazon may not seem like an obvious AI play, but its cloud computing platform, Amazon Web Services (AWS), is a critical part of AI. Most AI start-ups don't have the capabilities or resources to build a giant data center to run their project. So, they rent out computing power from a business like AWS.
If AWS continues to excel, so will Amazon, and with the AI buildup expected to occur for some time, the company is well positioned to grow for the foreseeable future.
NASDAQ: AMZN
Key Data Points
Another name Ackman purchased in Q4 is familiar: Meta Platforms (META 1.73%). Meta is the parent company of Facebook and Instagram, and also has several exciting AI endeavors. However, the market is concerned about Meta's AI spending, and the stock is well off its highs as a result. Ackman saw this as a buying opportunity, which is why he purchased nearly $2 billion worth of Meta stock during Q4. If Meta can turn it around, this could be a genius move, and echoes some of the actions Pershing Square has taken on other stocks.
While Ackman bought these AI stocks, he also sold some others.
Ackman isn't only buying AI stocks; he's selling too
Alphabet (GOOG +0.85%) (GOOGL +0.81%) is another name that Ackman owns. Alphabet wasn't a loved AI stock until the second half of 2025, and its rally has extended into 2026 as well. Between both classes of stock, Alphabet makes up nearly 14% of Pershing Square's investment portfolio, so it's clearly a large conviction for Ackman. However, he has started to sell off some Alphabet, potentially to fund other investments. Why? Alphabet's stock has gotten a tad expensive after being undervalued for a while.
GOOG PE Ratio (Forward) data by YCharts.
At 27 times forward earnings, Ackman and his team may not feel as bullish on Alphabet as they once did. There is a clear investment strategy here: Buy the unloved AI stocks at a discount, and sell if they become too loved. This can be a great strategy for investors, and if you can pinpoint when the market has become too bearish or bullish on a stock, you can make a solid profit.
