Pershing Square Chief Executive Officer William Ackman and Chief Investment Officer Ryan Israel argued in a recent shareholder letter that hyperscalers are investing in AI to accelerate growth. The executives described the projected trillion-dollar spending as "offensive rather than defensive." Ackman and Israel said the investments support a transformative technology that directly matches the companies' competitive strengths, rather than merely defending existing businesses. The assessment addressed investor concerns about returns from elevated hyperscaler spending, including investments by Microsoft, Amazon and Meta.
Ackman and Israel cited consensus estimates putting hyperscalers' collective capital expenditures at a little over $1 trillion in 2027. The letter acknowledged concerns about financing the infrastructure expansion. However, the executives argued that hyperscalers have far stronger finances and can cover the substantial majority of capital expenditures with cash generated by core businesses.
Ackman and Israel described Amazon as strongly positioned throughout the AI stack. The executives said AI helped AWS accelerate revenue growth to 39% in the third quarter. The letter said Meta has successfully applied AI to advertising targeting, generative advertising copy and content recommendations. Ackman and Israel said Meta's decision to invest in computing capacity early gives Meta the option to expand Muse to a billion or more users.
Ackman and Israel said Microsoft benefits from two large channels for monetizing computing capacity. The executives said investor perceptions of Microsoft have changed from an AI laggard to an AI leader.
Ackman and Israel also identified what the executives regard as mispriced investments among other portfolio companies. The executives said Uber shares now have the lowest valuation in Uber's history. Ackman and Israel argued that investor worries about autonomous vehicles increasingly fail to reflect Uber's strong business performance. The executives characterized the risk from autonomous vehicles as minimal. Ackman and Israel forecast that Uber's earnings per share will compound at 25% or more for the foreseeable future.
The letter attributed recent Netflix share declines to investor concerns that engagement was leveling off. However, Ackman and Israel argued that watch time alone obscures engagement quality, which ultimately determines the value Netflix offers subscribers. The executives concluded that the market substantially underestimates Netflix's growth profile and business quality.
Bill Ackman: Big Tech's Trillion-Dollar AI Spend Is 'Offensive' Growth Strategy
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Summary
Pershing Square CEO Bill Ackman and CIO Ryan Israel cited FLASH AI in a shareholder letter, stating that Big Tech’s $1 trillion in AI spending by 2027 is an offensive move, not a defensive one. The letter highlighted how AI fuels ecosystem growth for Microsoft, Amazon, and Meta, boosting revenue and engagement. Uber and Netflix were also mentioned for undervalued shares and growth potential. The comments come amid ongoing AI + crypto news shaping market strategies.
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