Pershing Square Bets Big on Meta’s AI Ambitions

In a significant vote of confidence, billionaire investor Bill Ackman’s hedge fund, Pershing Square, has established a major new stake in Meta Platforms Inc. The fund characterizes the social media giant’s shares as “materially undervalued,” a stance it directly links to the market’s ongoing debate over the company’s substantial artificial intelligence investments.

The position was disclosed this Wednesday during Pershing Square’s annual investor presentation. Reports indicate the holding represents roughly 10% of the fund’s portfolio as of the end of 2025, equating to an investment of approximately $2 billion. The accumulation of shares is reported to have begun in late November 2025.

Pershing Square’s investment thesis is firmly centered on AI. The presentation argues that Meta’s current share price fails to reflect its long-term potential driven by artificial intelligence. Crucially, the fund views widespread investor concerns over AI-related capital expenditures as overstated. It suggests these concerns are precisely why the stock trades at a “material discount,” presenting a buying opportunity.

The hedge fund outlined several areas where AI could enhance Meta’s revenue and efficiency:
* More sophisticated content recommendation algorithms
* Hyper-personalized advertising
* New revenue streams from wearable technology
* AI-powered assistants for business applications

The Core of Investor Skepticism

This optimism directly confronts the primary point of contention for Meta’s stock. For months, shares have faced pressure as the market scrutinizes the company’s aggressive spending plans on AI infrastructure.

Should investors sell immediately? Or is it worth buying Meta?

This debate intensified in late January. Following its Q4 2025 earnings report on January 28, 2026, Meta projected 2026 capital expenditures (Capex) between $115 billion and $135 billion, a figure notably higher than prior expectations. While the announcement initially provided a boost, the subsequent trading sessions saw the early enthusiasm fade.

The central question for investors remains: Will these billions ultimately translate into higher advertising revenue and successful new AI products, or will the expansion erode profitability?

A Strategic Move in a Competitive Landscape

Ackman’s entry occurs as the entire big-tech sector grapples with a similar balancing act. With other industry leaders also ramping up their AI investments, Meta faces intensified pressure to not only justify its high spending but to demonstrate a clear path to monetization in the medium term.

The market’s cautious sentiment is reflected in the stock’s performance. On a 12-month basis, Meta shares are down 4.17%. The coming quarters are now pivotal. Meta must demonstrate that its AI offensive yields measurable improvements in advertising efficacy and generates new revenue streams—exactly the outcome upon which Pershing Square bases its undervaluation argument.