Bill Ackman just made his biggest bet of the year.
Pershing Square's annual investor presentation on February 11 revealed a massive new position: ~10% of fund capital — roughly $2 billion — allocated to Meta Platforms.
The thesis: one of the world's greatest businesses, trading at a "deeply discounted valuation."
The Entry Point
Pershing started buying on November 24, 2025. Average entry price: around $625/share. That translates to a next-twelve-months P/E of just 21.1x.
For context, Meta currently trades around $670. Analysts have targets ranging from $840 to $1,144.
Ackman thinks the market is wrong.
The Pershing Square Thesis
The presentation laid out classic Ackman logic: simple business, durable moats, temporary discount.
Dominant ad platform. Meta reaches 3.5 billion daily active users across Facebook, Instagram, and WhatsApp. Digital advertising is a secular growth market. Meta's scale compounds — more users mean better targeting, which means higher ad ROI, which attracts more advertisers.
AI as moat-deepener. Pershing sees Meta as "one of the clearest beneficiaries of AI integration." AI already powers content recommendations and ad personalization. Future applications include business AI assistants, smarter wearables, and entirely new engagement models.
Spending fears overblown. Yes, Meta is ramping capex — $115-135B planned for 2026 (midpoint ~$125B, up 73% YoY). But Pershing argues the core ad business is high-margin and cash-rich. The 2023 "Year of Efficiency" proved Zuckerberg's cost discipline. Recent Reality Labs budget trims show continued prudence.
Founder-led, cash-rich. Zuckerberg's control, strong balance sheet, and massive free cash flow generation complete the picture.
The Valuation Math
At current prices (~$670), Meta trades at roughly 22x forward earnings. Exclude Reality Labs losses, and it's closer to 20x.
For a company with:
- 20%+ revenue growth
- 40%+ operating margins
- Dominant position in digital advertising
- AI tailwinds across the business
Ackman says that's a bargain.
What Wall Street Thinks
Analysts largely agree:
| Firm | Rating | Price Target | Notes |
|---|---|---|---|
| UBS | Buy | $872 | Strong AI trajectory |
| Rosenblatt | Buy | $1,144 | Highest conviction call |
| Consensus (~45) | Strong Buy | $840-860 | 25-30% upside |
Most view any AI-spending-related weakness as a buying opportunity.
The Risk: Capex Reality
Meta's Q4 2025 earnings (January 28) crushed estimates. Revenue beat. Stock jumped 10%.
Then the $125B capex midpoint hit. The debates resumed. Free cash flow compression is real — some analysts forecast a sharp drop as infrastructure buildout outpaces growth.
Meta just broke ground on a 1-gigawatt data center campus in Indiana. More are coming. The question: will AI monetization arrive fast enough to justify the spend?
Ackman's Track Record
Pershing Square doesn't make concentrated bets lightly. Past wins include:
- Chipotle — bought during food safety crisis, 10x return
- Canadian Pacific — activist turnaround, massive gains
- Universal Music — bought at IPO, strong performer
When Ackman goes big, he usually has a thesis.
What to Watch
- AI monetization — Can Meta show concrete revenue gains from AI investments?
- Reality Labs — Does the metaverse spending finally pay off, or get cut further?
- Ad market health — Any macro weakness hits Meta first
- Regulatory risk — FTC, EU, and antitrust remain overhangs
The Bottom Line
Ackman is betting that AI fears have created a temporary discount on a structural compounder.
At 21x earnings with 3.5 billion users and AI tailwinds, he may be right. The market's skepticism could look laughable in a few years.
Or the capex hangover lasts longer than bulls expect.
Either way, Pershing Square just put $2 billion on the table. That's conviction.
META