Billionaire Ackman Takes Major Stake in Meta
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1 day ago
0mins
Should l Buy META?
Source: Fool
- Ackman's Investment Move: Billionaire Bill Ackman took a significant position in Meta Platforms during Q4, acquiring 2.67 million shares valued at nearly $2 billion, which constitutes over 11% of his Pershing Square portfolio, reflecting confidence in Meta's growth potential.
- Market Reaction Fluctuations: Meta's stock has experienced a love-hate relationship with the market, and despite a 20% drop from its all-time high, the company reported a 24% year-over-year revenue increase to $59.9 billion in Q4, indicating sustained profitability.
- Future Outlook: Meta anticipates capital expenditures between $115 billion and $135 billion for 2026, primarily for AI data centers, a substantial figure that raises market concerns but could yield significant future cash flows.
- Investment Strategy Analysis: Ackman's long-term investment approach aligns with Meta's current undervaluation, suggesting that he views the company's AI spending as a necessary short-term sacrifice for future robust cash flow generation.
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Analyst Views on META
Wall Street analysts forecast META stock price to rise
44 Analyst Rating
37 Buy
6 Hold
1 Sell
Strong Buy
Current: 657.010
Low
655.15
Averages
824.71
High
1117
Current: 657.010
Low
655.15
Averages
824.71
High
1117
About META
Meta Platforms, Inc. is building human connections, powered by artificial intelligence and immersive technologies. The Company's products enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality (VR) and mixed reality (MR) headsets, augmented reality (AR), and wearables. It also helps people discover and learn about what is going on in the world around them, enabling people to share their experiences, ideas, photos, videos, and other content with audiences ranging from their closest family members and friends to the public at large. The Company's segments include Family of Apps (FoA) and Reality Labs (RL). FoA segment includes Facebook, Instagram, Messenger, WhatsApp and Threads. RL segment includes its virtual, augmented, and mixed reality related consumer hardware, software and content. Its product offerings in VR include its Meta Quest devices, as well as software and content available through the Meta Horizon Store.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Fashion Show Highlights: At Milan Fashion Week, Prada showcased its Fall/Winter 2026 collection featuring embroidered satin dresses, sheer skirts, and wool sweaters, emphasizing rich layering and diverse design concepts that garnered significant attention in the fashion industry.
- Celebrity Presence: Mark Zuckerberg, CEO of Meta, and his wife Priscilla Chan attended the front row, fueling speculation about a potential collaboration between Prada and Meta for smart glasses, highlighting the intersection of fashion and technology.
- Model Selection: Designers Miuccia Prada and Raf Simons opted for only 15 models to walk the runway, each showcasing multiple looks to emphasize layering, reflecting the multifaceted identities of women and enhancing the brand's feminist narrative.
- Future Collaboration Potential: Although no decision has been made, exploratory talks between Prada and Franco-Italian eyewear maker EssilorLuxottica indicate a strategic interest in the smart glasses market, potentially paving the way for future product innovations.
See More
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- Deal Details: Meta will purchase 6 gigawatts of AMD's graphics processing units (GPUs) and become a lead customer for AMD's sixth-generation EPYC central processing units (CPUs), showcasing Meta's strong demand and strategic positioning in the AI sector.
- Equity Incentives: As part of the deal, Meta will receive warrants for up to 160 million shares of AMD, representing about a 10% stake based on current share count, providing Meta with potential future equity appreciation.
- Supply Chain Diversification: By collaborating with both AMD and Nvidia, Meta aims to reduce reliance on a single supplier, thereby lowering costs through a diversified source of AI chips, enhancing its data center competitiveness.
- Financial Performance: Meta's revenue grew by 24% last quarter, reflecting strong returns on its AI investments, and with a forward P/E of 21 times, it appears highly attractive in the current market environment.
See More
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- Equity Stake: Meta will receive warrants for up to 160 million shares of AMD, which represents about a 10% stake based on current share counts, providing Meta with a more cost-effective chip procurement strategy.
- Capital Expenditure Plans: Meta plans to invest between $115 billion and $135 billion in capital expenditures in 2023, demonstrating a significant strategic commitment to AI technology aimed at reducing reliance on Nvidia and diversifying its supply chain.
- Financial Attractiveness: With a forward P/E ratio of 21 times, coupled with its nearly $35 billion investment in AMD, Meta's stock appears attractive at current levels, potentially making it a top choice for investors.
See More
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- Diverse Investment Strategies: Billionaire investors are employing various strategies for AI investments, with some opting for the fastest-growing stocks while others focus on indirect plays like utilities and infrastructure, indicating a broad recognition of AI's potential across the market.
- Ackman's Concentrated Holdings: Bill Ackman and his Pershing Square Capital maintain a highly concentrated portfolio with only 10 companies, reflecting strong confidence in their picks, with Brookfield comprising 18% of his portfolio, directly involved in AI-related businesses, showcasing his bullish stance on the sector.
- Amazon's Critical Role: Ackman allocates 14% of his portfolio to Amazon, which, while not traditionally viewed as an AI company, has its AWS cloud computing platform essential for AI startups, suggesting that as AI demand grows, Amazon's market outlook will remain positive.
- Counter-Cyclical Investment in Meta: Ackman purchased nearly $2 billion worth of Meta stock in Q4, viewing it as a buying opportunity despite market concerns over its AI spending, indicating his ability to capitalize on market fluctuations, and if Meta can successfully pivot, it could yield significant returns.
See More
Ackman's Strategic AI Investment Approach
- Concentrated Portfolio: Ackman and Pershing Square held only 10 companies in Q4, reflecting high confidence in their selections, and successful picks could yield significant returns.
- Brookfield Heavyweight: Ackman's largest holding is Brookfield, making up 18% of his portfolio, which is heavily involved in AI-related businesses like power transmission and data centers, indicating his bullish stance on AI.
- Amazon Stake Increase: Ackman increased his Amazon stake by 65% in Q4, now comprising 14% of his portfolio, as its cloud platform AWS serves as a critical infrastructure for AI projects, suggesting substantial future growth potential.
- Meta Buying Opportunity: Ackman purchased nearly $2 billion worth of Meta stock in Q4, viewing it as a buying opportunity despite market concerns over AI spending, and if Meta can turn around, this investment could yield substantial returns.
See More
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- Rising Storage Costs: As companies like Snap and Google Photos phase out unlimited free storage, users are facing significant increases in storage fees, with Google Cloud's 200GB plan rising from $2.99 to $4.99 per month, heightening sensitivity to storage costs and impacting consumer spending decisions.
- Surge in User Complaints: Data from PissedConsumer.com indicates a continuous rise in consumer complaints regarding cloud storage issues in 2023, with many users feeling compelled to pay to retain access to personal files, highlighting a pressing demand for transparency and service quality in the market.
- Emotional Impact Intensifies: Experts note that users' emotional attachment to personal data makes the shift to paid cloud storage feel more painful, as many worry about losing their digital history, which affects their satisfaction and loyalty towards these services.
- Shifting Market Dynamics: The monetization of cloud storage services is altering consumer habits, with traditional photo storage methods being replaced by digital solutions, leading to a decline in related industries while simultaneously creating growth opportunities for emerging services.
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