Billionaire Bill Ackman Has 14% of His $12 Billion Hedge Fund in 1 Top AI Stock

Pershing Square Capital Management, led by Bill Ackman, holds 14% of its $12 billion portfolio in Alphabet (GOOGL) as of March 31, citing the company's dominance in AI and strong financial position with $95 billion in cash and marketable securities. Despite Alphabet's stock being down approximately 9% year-to-date and trading 17% below its peak, the article suggests investors consider following Ackman's lead, highlighting Alphabet's attractive valuation at a price-to-earnings ratio of 19.2 and its first quarter net income of $35 billion.

Analysis

Pershing Square Capital Management's allocation of 14% of its $12 billion portfolio to Alphabet (GOOGL, GOOG) as its third-largest holding, as of March 31, signals strong institutional conviction in the company's artificial intelligence leadership and fundamental value. Alphabet's decade-long investment in AI is evident in recent Google I/O announcements, such as Gemini Agent Mode and a partnership with Warby Parker for AI smart glasses, reinforcing AI's integral role in its product ecosystem and future strategy. This focus is underpinned by robust Q1 financial results, where the company exceeded Wall Street expectations for revenue and earnings per share, with ad sales growing 8% year-over-year, net income reaching $35 billion, and free cash flow standing at $19 billion. Furthermore, Alphabet's $95 billion in cash, cash equivalents, and marketable securities provides substantial resources for continued aggressive AI investment. Despite the stock being approximately 9% down year-to-date and 17% below its February peak, it trades at an attractive price-to-earnings ratio of 19.2, near its lowest multiple in the past decade, which, combined with its significant economic moats in Search and YouTube, presents a compelling valuation argument.

Key Decisions for Investors

• Given Alphabet's strong AI positioning, robust Q1 financial performance including $35 billion in net income, and a current P/E ratio of 19.2 which is near its decadal low, investors could consider the recent share price decline of approximately 9% year-to-date as a potentially attractive entry point, aligning with Pershing Square's substantial holding.
• Investors should closely monitor the execution and market reception of new AI initiatives, such as Gemini Agent Mode and the planned integration of advertisements within AI Overviews, as these are critical catalysts for future revenue growth and market sentiment.
• While the article suggests a bullish outlook supported by a prominent hedge fund's position and attractive valuation metrics, investors should also note that Alphabet was not listed among the Motley Fool Stock Advisor's most recent top 10 stock picks, indicating the value of conducting thorough due diligence and considering a diversified approach to technology investments.