Bill Ackman’s Pershing Square revealed a massive stake in Meta Platform during the hedge fund’s annual investor presentation. The stake in the Meta Stock amounts to 10% of Pershing’s capital as of 2025-end.
‘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,’ according to the presentation.
The Meta stock is down 12.6% over the past six months amid fears of high AI spending with no equivalent revenue to show for. In its Q4 earnings report, Meta said it expects 2026 capital expenditures to go up to $135 billion in 2026, primarily due to AI spending, which is much higher than the $72.2 billion capex in 2025.
‘We believe concerns around META’s AI-related spending initiatives are underestimating the company’s long-term upside potential from AI,’ according to Pershing Square. The hedge fund highlighted that Meta is trading at 22 times its forward earnings multiple over the next 12 months, which is cheap considering how much AI is set to drive future earnings growth.
Multiple Tailwinds for Meta Stock
Pershing Square described Meta’s fast-growing user base, 22% annual revenue growth, and leadership in the digital ad segment as key positives, while taking note of the company’s high-quality, scalable ad business model and growing engagement across its user base.
‘Meta’s business model is one of the clearest beneficiaries of AI integration,’ which can help refine content suggestions, personalise ads, automate campaigns, and develop new use cases.
Despite increased AI investment in 2026, the hedge fund said Meta’s robust balance sheet, high-margin core business, and continued cost discipline support long-term earnings growth.
Brokerage Not Overly Bullish
US megacap tech firms, including Meta, have collectively announced plans to invest more than $630 billion in AI buildouts this year, which is more than double the spend in 2025. Meta is planning to launch Superintelligence Labs and recently broke ground at a data centre campus in Lebanon, Indiana, representing an investment of over $10 billion in AI infrastructure.
While Needham analyst Laura Martin believes the Meta stock is ‘priced for perfection,’ the analyst also warned that the stock could decline by 15% if it misses growth targets, which could compress margins rapidly.
The analyst’s caution related to the stock focuses on the timing of Meta’s performance instead of the company’s competitive edge. Needham also forecast that Meta’s operating margins could fall to 30% this year from 40% in 2025. However, Martin was positive on the ad-tech space, highlighting solid performance recorded by digital advertising companies in Q4 and the positive read-throughs for major firms like Google’s parent Alphabet.
Meta is also tackling multiple legal challenges, including a patent infringement lawsuit filed by Solos Technology over its smart glasses technologies. The lawsuit targets Meta and eyewear partners as Solos seeks billions of dollars in damages and potential injunctions on smart eyewear products. Separately, Meta is also preparing to go to trial in New Mexico over allegations related to child exploitation and failures to safeguard minors on its platforms.
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Originally published on IBTimes UK
